BRITISH AIRWAYS, Virgin Atlantic and five other British airlines have put up for sale their controlling stake in National Air Traffic Services, the company that provides air-traffic control in the UK.

The airlines have been prompted to cash in by the current mania for infrastructure businesses, with British ports and airports fetching record prices in recent months.

But their decision will generate a political storm. Nats was controversially privatised in 2001, with The Airline Group — a consortium of seven carriers — only chosen as the buyer after promising its bid was “not for commercial return”.

The seven will make a handsome return on their original investment. Together they put in £50m in 2001 and are likely to make up to six times that, according to unofficial estimates of Nats’ value. Airline-industry executives think it could be worth up to £600m.

The airlines’ exit may also trigger consolidation among European air-traffic control agencies. The German government is preparing to sell a stake in DFS, its provider, and some bankers predict a wave of deals similar to that which brought together Europe’s stock exchanges.

The sale is likely to cause particular unrest among public-service unions, which backed The Airline Group against other bidders.

Nats provides the majority of air-traffic control in the UK, directing take-offs and landings at 15 of Britain’s largest airports. Its biggest business is “en-route” control, where it guides aircraft passing through British airspace. It also looks after a large swathe of the skies above the Atlantic. It handled 2m flights and 220m passengers last year, and made a pre-tax profit of £80m.

Before the 1997 general election, Labour had pledged UK airspace “was not for sale”. The eventual public-private partnership encountered stiff opposition and lengthy delays in the Lords before being signed off in March 2001.

The Airline Group, comprising British Airways, Virgin, BMI British Midland, Easyjet, MyTravel Airways, Monarch and Thomsonfly (formerly Britannia Airways), originally took a 46% stake in Nats, and was given assurances it would have management control. The government retained 49%, with an employee trust holding 5%.

But Nats was plunged into crisis just months after the deal was completed. The September 11 terrorist attacks resulted in a slump in air travel, leaving the company struggling to meet its interest bill.

A rescue package was put together by ministers, with the government and BAA, the airports group, each injecting an extra £65m. BAA ended up with a 4% stake, reducing The Airline Group holding to 42%.

The members of the group declined to comment yesterday, but industry sources confirmed they had taken the decision to sell. Companies likely to be interested in buying the Nats stake include Macquarie, the acquisitive Australian investment bank with a voracious appetite for transport infrastructure, and a clutch of competing infrastructure investment funds set up by rival banks.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats