Airways hopes to fly high on shortlist for British bid

By DANIEL RIORDAN

New Zealand's Airways Corporation is likely to find out tomorrow if its bid for a piece of Britain's air traffic control system remains alive.

The British Government is expected to announce a final shortlist of two or three bidders for the 46 per cent of National Air Traffic Services being sold as part of Prime Minister Tony Blair's privatisation programme.

Those on the shortlist will be required to submit binding bids by early February.

Airways Corporation is part of a joint-venture bid called Novares, alongside US aviation giant Lockheed Martin and British venture capital fund Apax Partners.

Novares was one of four bidders that lodged indicative bids at the end of September.

The other three in the running are a joint venture of British airlines called The Airline Group, international management group Serco's Nimbus consortium, which also includes financial services firm Prudential, and US defence group Raytheon.

The sale process is being managed on behalf of the British Government by investment bank Credit Suisse First Boston (CSFB), with NM Rothschilds advising Novares.

Some media reports have The Airline Group as the favourite, but CSFB London-based project manager Philip Iley doubted those reports.

He said if one party was clearly favoured, the British Government would probably be negotiating with it directly, rather than going through the sale process.

The $1.8 billion sale received a political setback just over a week ago when the House of Lords voted to delay the process until after the British general election, expected to be called in the first half of next year.

The Lords, by 112 votes to 90, backed an Opposition amendment that blocked the British Government's plans.

The peers are concerned that there will be lower safety standards under private ownership.

Their fears have been heightened by the commuter rail crash at Hatfield that killed four people, including New Zealander Rob Alcorn.

But a Government spokesman said ministers were confident that they would overturn this defeat with the bill's return to the Commons this week.

Mr Iley said the Government was also confident that the bill would pass through the Lords on its next attempt, as Government forces in the Upper House would be better marshalled.

Airways' involvement in the purchase bidding has had its controversial moments.

New Zealand First leader Winston Peters took umbrage with the offering of incentive payments to Airways employees should the Novares bid prove successful.

He claimed in May that Airways had been used "as a vehicle for insider trading by some public employees with an eye to the main chance."

However, an Audit Office inquiry cleared the company of any serious wrongdoing.