Examination of witnesses (Questions 300-319)
MR RICHARD EVERITT AND MR COLIN CHISHOLM
TUESDAY 11 JUNE 2002
300. Have you discussed the £65 million with the Government?
(Mr Everitt) The Government have been fully aware as our biggest shareholder of all the discussions that have gone on with BAA. They have not reached a concluded view yet as to what their investment will be, I understand.
301. Have the Government discouraged you from pursuing that higher figure?
(Mr Everitt) No, not at all.
302. In terms of the discussions we had previously about the strength of your balance sheet and the international situation, is that additional money, should you be able to secure it, intended to provide you with an additional buffer against turbulence in the marketplace?
(Mr Everitt) The whole objective of this is to create a situation in which we have greater strength than we do now to deal with any further future potential turbulence. Obviously ideally we would like to have a two to three year period before the next review in which we can, as it were, progressively strengthen the finances over that time but one of the objectives quite clearly is to create a situation in which we are certainly much stronger than the original financial structure was against a shock. I think we have to be
Chairman: Mr Everitt, I do not know whether that is a yes or a no but we do have to have some rather briefer answers.
303. This new money is equity rather than debt?
(Mr Everitt) It is partly equity. It will be mainly secondary debt.
304. So effectively you are expanding your gearing?
(Mr Everitt) No, because I think we will pay down some of the senior debt. We will use the bulk of it to pay down the senior debt, we will not have a repayment profile.
305. So what will be the debt to equity ratio if you get the £130 million?
(Mr Everitt) I could not tell you off the top of my head but by the end of the control period we would be less than 100 per cent, which is what I am trying to get to.
306. In the short-term?
(Mr Everitt) In the short-termSorry, I really would have to give you a note on that, I do not know in the short-term. Senior debt to equity would obviously reduce and as we do not have a repayment profile on the junior debt that would help.
307. It is slightly worrying that the Chief Executive does not know how much the new financing package is going to add or subtract from his gearing.
(Mr Everitt) I have been looking at an awful lot of figures in the past seven days, mainly looking at the position over the next three years. Off the top of my head I just do not have the precise number but I can give it to you.
308. Last question, just an update on the screen issue. There was an exchange of letters in the Observer about the evidence you gave us last time about the role of planners in which some disagreement was expressed from within your ranks. Can you update us on the progress and also clarify that situation?
(Mr Everitt) Certainly. The letter in the Observer suggested that I was underplaying the role of the planner. The planner's role is an important role, it sits equally with the tactical controller role. The point that I was trying to make was that the data that was being used was for planning purposes, not actually handling the aircraft live. What I am pleased to say is that the working group that I told you about has prototyped some changes, that prototyping has gone very well.
309. Does that mean that they have changed the fonts and it is working in the computers?
(Mr Everitt) No, no. We have prototyped changes of fonts, we now have to consult with all the controllers at Swanwick to make sure that they are content with what the group is proposing should be done and we will implement that because it is a software change, it is not something we can just change overnight
310. We understand all this, Mr Everitt. Has the software been changed? How long will it be before it is changed? Is it in operation at the moment?
(Mr Everitt) It has not been changed, it has been prototyped. We will consult on the results, we will change it. The objective is November, before if possible.
(Mr Everitt) If not before.
312. There have been instances of controllers not able to read clearly certain letters and figures, is that not right?
(Mr Everitt) There have been instances where that has happened. This has not resulted, as the press speculated, in aircraft being sent to the wrong destination or to the wrong height. Those issues were reported in the reports and the whole process of changing these fonts is designed to address that situation.
313. Are you satisfied that such a situation can continue to exist until November considering we are in only a rather cold June?
(Mr Everitt) I have checked, as Mr Chisholm has checked, with the safety regulators, they are satisfied that these are not safety related issues. It is something that we will do as soon as we possibly can but I do want to make sure people are content with the changes that we are proposing to make.
314. The Health and Safety Executive required you to produce an action plan. One, can we see that action plan? Two, have you complied with it?
(Mr Chisholm) We sent a very comprehensive reply to the Health and Safety Executive on 21 May. I think we could readily make that response available to the Committee.
315. And they are satisfied with that?
(Mr Chisholm) They have not come back to us with any further queries.
316. When did you send it to them, Mr Chisholm?
(Mr Chisholm) 21 May that was sent.
317. I am interested in the relationship between the Airline Group and NATS. I notice in the press today the Chief Executive of Ryanair described that relationship as similar to a fox being put in charge of a chicken run. I am just wondering how you would view the relationship?
(Mr Everitt) I certainly do not view it that way. The Government is our biggest shareholder, we have a board made up of four Airline Group directors, three Government directors, three executive directors, an independent chairman and the secretary general of IATA. I think it is a completely wrong characterisation. We have an alignment of interests with the Airline Group in terms of the development of the business and I think that is very positive.
318. Just one more question on the issue of between now and November and any problems that we hope will not emerge. Are you saying the system that is in place at the moment is such as not to give rise to the likelihood of any similar repetition between now and November?
(Mr Everitt) I do not believe that the fonts issue is a safety issue. It is clearly something that we can improve. We now know, I think, how we will improve it and we will improve it as soon as we can but it is a software change and I do not want to just make a change because one group thinks it is okay, even though that group is made up of a wide span of interests
319. Even though they are the people who have to read it.
(Mr Everitt) It does include the people who have to read it.