National Air Traffic Services (Nats) is facing new financial
pressure as a High Court battle against IT services supplier EDS
runs into its third month.
The case, which began in earnest in February, was not expected to
continue beyond early April but the examination of witnesses is
taking much longer than planned.
Already the hearing has cost millions of pounds, and has beaten the
30-day record for a High Court IT battle.
Unless there is an early settlement, the case is due to continue
into May and could run into June. The legal costs could exceed £5m,
a bill that the losing side could be ordered to pay.
If Nats loses, it also faces paying more than £42m in damages to
EDS which, with interest, could bring the final bill to nearly
£50m. This would eliminate the advantage of the £30m emergency loan
from the Government to help Nats meet its financial commitments.
Instead of a forecast profit, Nats is facing an annual loss,
because of a fall in income from airlines after the events of 11
September. It is facing further financial pressure because the
Civil Aviation Authority is expected to reject a Nats request for a
5% rise in charges to airlines for air traffic control
services.
The High Court hearing arose when EDS sued for more than £42m after
Nats terminated its 14-year private finance initiative contract in
July 2000, 11 years early without sufficient reason, EDS claims.
Nats is counter-claiming £8m and says it ended the partnership
because of EDS' failure to meet a critical milestone.
A spokesman for the airlines that own 46% of Nats denied that the
High Court case was adding to financial pressures. He said the sums
involved were not large in relation to Nats' business.