TT. Tui Travel

U.K. air-traffic controller NATS has urged the government to retain a stake in the company, Chief Executive Richard Deakin said Thursday.

The U.K. government is considering whether to sell all, part or none of its 49% holding in NATS, Europe's only privatized air-traffic controller. A call for feedback from stakeholders on the appropriate level of state ownership closed Wednesday.

Deakin said a "visible interest" held by the government in the air-traffic controller was essential.

"I believe it would be a significant challenge to continue operating with the same status as European partners unless the government retained a meaningful minimal presence," Deakin said.

Deakin said the government could eventually end up holding shares, creating a golden share or simply having influence via a regulatory framework. Still, he expects to learn more from the government in the third quarter of this year after it returns from its summer break.

A decision to reduce the stake would create a "strong rationale" for employees to be given greater access to share ownership, he said.

"The 5% our employees own through the share trust gives individuals a small stake in the company," he noted. A greater share would strengthen employees' confidence in, and commitment to, NATS' future.

The company's two key shareholders are the British government and the Airline Group, a consortium of seven airlines that holds 42%. Both are considering what percentage to sell.

The other shareholders are NATS employees with a 5% stake and U.K. airports operator BAA Ltd. with 4%.

The Airline Group comprises British Airways PLC, Deutsche Lufthansa AG (LHA.XE) unit bmi British Midland, Virgin Atlantic, TUI Travel PLC's (TT.LN) Thomson Airways, Monarch Airlines, easyJet PLC (EZJ.LN) and Thomas Cook Group PLC (TCG.LN).

National Air Traffic Services was established in 1962 but rebranded as NATS in 2006. In July 2001 it became a public-private partnership, which led to the division into the regulatory part, NATS (En Route) PLC, which is responsible for U.K. commercial airspace, and NATS Services Ltd., which provides takeoff and landing services at airports.

It is working with Spain's Ferrovial SA (FER.MC) through a joint venture called FerroNats, which is bidding for traffic management at airports. BAA is a unit of Ferrovial.

Deakin sees further opportunities in Sweden and Italy, as well as potentially in Greece, Ireland and Portugal, which have suffered badly from debt crises and are being forced to sell assets.

NATS is also pushing its airspace design and traffic control business and is in talks with Dubai, Qatar and Abu Dhabi, a person familiar with the matter told Dow Jones Newswires.

In Dubai, NATS is keen to look after Al Maktoum International Airport's traffic management.

Airline Emirates, for one, has been expanding its fleet aggressively and, this person said, air traffic would need to be adjusted to cater for the extra aircraft.

In Qatar, NATS has bid for airspace design, the person said.

NATS in July signed a deal with Oman's Ministry of Transport to redesign its airspace, or the routes that aircraft travel, in order to increase capacity, efficiency and safety. Deals like that were becoming increasingly important given the political fragility of the region and the proximity to Iran, Deakin previously told Dow Jones Newswires.

Winning further business will be easier now that it has a more prominent profile following volcanic eruptions that grabbed the world's attention.

He said the company now was finalizing those airspace designs.

-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; kaveri.niththyananthan@dowjones.com

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