NATS chalks up £89m rise in profits

The UK’s air navigation service provider NATS has announced an £89 million rise in pre-tax profits to £195 million.
Revenue for the year to 31 March increased by £88 million to £865 million, while pre-tax profits rose by £89 million to £195 million.

Richard Deakin, chief executive, said: “We are acutely aware of the high cost to our airline customers of delay and flight inefficiency. This explains our focus on continuing to provide the highest standards of safety, environmental and service performance, cost-effectively. We believe this delivers the greatest economic value.

“We are looking to find innovative solutions that add even more value in the future. For example, if we deliver on flight efficiency targets, enabling our customers to save 600,000 tonnes of CO2, we will reduce their fuel bill by some £120 million at today’s prices.

“And increasingly we are seeking to enhance these outcomes by working collaboratively with other air navigation service providers under the European Commission’s Single European Sky programme.”

Outside its economically regulated business, NATS provides a range of commercial air traffic and airport optimisation services. Through renewing existing domestic airport contracts and winning business in new markets in the year, the company secured forward orders worth £495m in the UK and 20 other countries. These included:

  • a new seven year contract with BAA to continue to provide air traffic control services to five airports (including Edinburgh, which has since been sold to GIP);
  • a two year extension to the Gatwick airport contract;
  • a five year contract awarded to its Spanish joint venture for air traffic control services to 10 airports;
  • consultancy contracts in the USA, the Middle East and Asia-Pacific.

NATS’ expertise in information management, designing and managing complex airspace, and optimising runway capacity for customers, supports the world’s busiest single and dual runway airports at Gatwick and Heathrow and is now helping to win new business internationally in markets from the USA to India, and from the UAE to Singapore.

Richard Deakin added: “We made excellent progress in generating business in new markets and, with a clear strategy and operating under the NATS brand, we have made a good start towards achieving our vision for 2015 of £1bn sustainable revenue.

“We are now looking forward to the Olympic and Paralympic Games. Our planning and preparations have been extensive, including the design and introduction of temporary new airspace. We have done this in close cooperation with airlines, airports, military, Civil Aviation Authority and Government. The significant volumes of air traffic during the Games represent one of NATS’ greatest operational challenges ever, but we are confident we can play our part in making it a successful event for the UK.”

Explaining the exceptional increase in profit mainly arises from the price control review for 2011-2014 (CP3) Deakin said this was the result of a resetting of mainly cash-based revenue allowances of the economically regulated business to enable the company to meet higher pension contributions and to recover additional investment in air traffic control systems.

NATS also adopted new traffic forecasts thereby ending the sizeable under-recovery of revenue allowances in the previous year caused by the weak economic environment.

NATS’ core en route air traffic control service is economically regulated and incentivised to deliver specific performance targets that create economic value for its airline customers. In the year, these involved delivering:

  • Safety and Capacity: Safety is our first priority. NATS handled some 2.2 million flights (2011:2.1 million) and for the fourth successive year achieved its target of no NATS attributable risk-bearing airprox, maintaining an already excellent safety record.
  • Low levels of delay: NATS limited average delay per flight to 7.3 seconds – around one tenth of the European average – achieved while integrating major new technology.
  • Saving fuel and CO2: NATS provided improved flight profiles to customers enabling savings of 25,000 tonnes of fuel worth c £17m, or the equivalent to 80,000 tonnes of CO2.

During the year, NATS also delivered a number of major projects with minimal disruption to services. This included transitioning iFACTS, one of the most advanced controller decision support systems, into full operational service at Swanwick, requiring some 30,000 hours of training to 480 staff. The system brings improvements to both safety and capacity.

NATS said this performance, supported by proactive communications, resulted in its best-ever customer satisfaction score with 81.1% of respondents satisfied or highly satisfied with the company’s service.