Dr Paul Golby CBE
There continues to be great uncertainty in any return to normal levels of air travel. Through the pandemic we have made significant economies but retained the skills and capacity necessary to ensure that we are able to safely support the recovery of aviation.
The form of any recovery remains unclear and may be subject to considerable volatility. We remain prepared for a variety of outcomes. The company and Board responded quickly at the onset of the pandemic to ensure that our staff were protected while maintaining a safe and resilient air traffic control service. We took decisive action to preserve liquidity by significantly reducing our cost base and, suspending all but essential capital investment.
Managing the impact of Covid-19 and the uncertainty it created was the defining theme of the last financial year and continues to be our focus, together with supporting our staff and delivering a safe service.
The volume of flights we handled in the year fell by 73% from the year before. This significantly impacted our liquidity and our price control is now being redetermined by the CAA. We responded quickly and effectively to restrictions caused by the pandemic, particularly in operational areas, to maintain a resilient operation, support our customers, secure our long-term finances and reduce our cost base.
- Result: The loss for the year (£37.8m) reflects the impact of Covid on the group’s revenue and regulatory allowances and the carrying value of its assets. We took action to reduce our cost base to preserve liquidity and to ensure that we are in a sustainable position to support the recovery in aviation.
- Workforce: Our priority has been the health and wellbeing of our workforce while maintaining a safe and resilient service for our customers. We have made significant economies but retained the skills and capacity necessary to safely support the recovery of aviation.
- Funding: In June 2021, NERL completed a full refinancing of its debt structure. It secured £1.6bn of funding by issuing £750m of unsecured bonds and agreeing £850m of new unsecured bank facilities. This enabled the redemption of more expensive secured bonds in place since 2003, and repayment of existing bank borrowings, including a £380m facility agreed in August 2020 which provided additional liquidity in response to Covid. The refinancing ensures the group is well placed for a range of recovery outcomes.
- Airprox: There were no risk-bearing airprox attributed to our operation during the financial year (2020: one).
- Price control: The CMA’s July 2020 final decision on the RP3 price control (2020 to 2024) has been overtaken by the impacts of Covid on the sector. The CAA is to determine a new five-year price control (NR23) starting in 2023, which will include an assessment to determine the level of recovery of NERL’s revenue shortfall across 2020 to 2022.
- Digital Tower: The London City digital tower entered operational service in January 2021.
- Contract win: Gatwick Airport awarded us a 10-year air traffic control and engineering contract from October 2022.
- Sustainability: We further demonstrated our commitment to sustainable aviation by making our flight efficiency tool, known as 3Di, available across the global industry at no cost.