NATS reports results for the year ended 31 March 2013

28 June 2013

Chairman John Devaney said: “This year saw the company make significant progress towards its strategic objectives and I am pleased to report another good set of results.”

NATS Holdings Limited and its subsidiaries (the NATS group or NATS) reported a turnover of £899.4m (2012: £864.9m) and a pre-tax profit of £190.7m (2012: £194.5m).  NATS provides air traffic control services through two main operating subsidiaries: NATS (En Route) plc, which is economically regulated, reported a profit before tax of £151.4m (2012: £154.8m) and NATS Services Limited reported a profit before tax of £40.3m (2012: £39.4m).

Richard Deakin, Chief Executive Officer, said: “This has been another solid financial performance for NATS. At the same time, we delivered exceptional service performance. The Olympics was one of the greatest operational challenges the company has ever faced but I am proud to say, along with the rest of Britain, we delivered.”

NATS safely handled 2.1 million flights during the year with even better punctuality than the previous year and a seamless service for the London Olympics. Average delay per flight was 1.4 seconds compared with 7.3 seconds the previous year, reflecting the benefit of new controller tools and systems. This is about 4% of the equivalent European average and NATS’ best-ever performance. In total, 99.9% of flights over the UK incurred no NATS-attributable delay and we also maintained our safety record.

Safely managing high peaks of additional traffic into some of the most complex and congested airspace in the world during the London Olympics presented a unique challenge.  NATS accommodated national security requirements without disruption to its commercial airline customers and this proved to be one of the major transport infrastructure successes of the Games.

NATS joined the Prime Minister’s UK trade mission to Brazil as part of the Olympics handover and legacy, to share our expertise developed over a three-year planning period for London 2012.

By providing our customers with more efficient flight profiles, in 2013 we enabled further savings of 6,926 tonnes of fuel worth approximately £4.5m.  Cumulatively, since our programme started in 2008, we have enabled fuel savings of 250,000 tonnes, saving customers £160m.  We are also meeting the economic regulator’s target for environmental efficiency.

Mindful of the continuing difficult economic climate facing airline customers, NATS’ charge for UK en-route services in 2013 was set £5 million below the level allowed by the economic regulator, and its London Approach charges were also priced below the maximum level allowed by £1 million.

New growth strategy making progress

NATS Services registered double-digit revenue growth and NATS now provides services to customers in 31 countries (up from 21 in March 2012). Our new US subsidiary was part of a consortium awarded a contract by the US’s Federal Aviation Administration, five Spanish airports are now being operated by our local joint venture FerroNATS and we continued to expand our activities in the Middle East. We also renewed contracts with Heathrow and Luton airports and we were contracted to fit-out Birmingham airport’s control tower.

Mr Deakin added: “I am pleased with the progress that we made in the first full year of our growth strategy. We are creating the right environment to develop our business internationally while retaining focus on the service we provide to key customers in the UK. I am grateful to UKTI for the support they have provided in all our efforts to win international business.”

Customer consultation in progress for next regulatory period

Last summer, the European Commission (EC) approved the UK’s National Performance Plan, of which NATS’ business plan for Reference Period 1 (RP1: 2011 to 2014), the first period of regulation under the Single European Sky initiative, formed the largest part.  Since then, the company has been preparing for RP2 (2015-2019).  EU-wide targets will be set in December 2013 for safety, capacity, environment and cost efficiency. Airline customers and regulators have indicated that they expect major service providers, including NATS, to make a significant contribution to cost efficiency improvements in RP2.

Taking account of the indicative range of cost efficiency targets for RP2, NATS has produced two price reduction offerings for customer consultation this summer: a service-led plan at lower price and a price-led plan.

Mr Deakin said: “We spent the winter preparing our business plan for RP2, which we recognise will be a significant challenge for the company.  I believe our innovative approach in developing two plans with service and pricing options shows how seriously we are preparing for it and this will enable constructive consultation with our customers this summer.”

Following a call for evidence on its shareholding in NATS, the Government decided to retain its 49% stake.  Some members of The Airline Group (AG), the Government’s strategic partner which owns 42% of the company, are considering the sale of their shareholdings in AG.

NATS is helping forge alliances to achieve the SES, and leads the A6 group of major European air navigation service providers represented in SESAR, the R&D programme which is intended to unlock major network efficiencies.

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