Nav Canada to invest $150 mln in air traffic venture with Iridium

Nov 19 (Reuters) - Nav Canada, the private company that

manages air traffic over Canada, said it would spend $150

million for a controlling stake in a joint venture with Iridium

Communications Inc that will track planes over oceans

in real time.

Nav Canada, which gets its money from airline fees, will

make the investment in five installments through 2017, giving it

a 51 percent stake in the joint venture, Aireon LLC.

The joint venture, first announced in June, will allow

aircraft to fly longer in better weather -- saving fuel,

decreasing carbon emissions and increasing passenger safety.

Air traffic authorities currently need to keep aircraft

widely spaced due to lack of radar visibility over oceanic

airspace and mountainous terrain.

"We're confident the North Atlantic (air traffic) will

substantially cover most of the costs of Aireon but it won't

cover all of them, so we need other parts of the world as well,"

Nav Canada Chief Executive John Crichton told Reuters.

"We're interested in other air navigation service providers

becoming investors."

Iridium, which will own the rest of Aireon, said while costs

of setting up the new venture were covered for now, it would be

open to taking on other investors.

The companies said they have yet to decide how much they

will charge for Aireon's services, which Nav Canada estimated

would save airlines over $100 million in annual fuel costs on

their North Atlantic routes alone.

Aireon has agreed that the price needs to be considerably

less than the expected fuel savings for the airlines, Nav

Canada's Crichton said.

Aireon's service will use receivers built into 66 satellites

in Iridium's second-generation constellation, due to be launched

starting 2015.

Although the joint venture will be fully up and running only

after the launch is complete in 2017, Iridium said Aireon will

start generating revenue right from when the first satellite is

turned on in just over two years.

Data from aircraft reporting their positions through the

system will start flowing in early 2015, Iridium CEO Matt Desch

said in an interview with Reuters.

"I know that a lot of the air navigation service providers

are going to be interested in that data even upfront and would

be glad to pay for it."

Aireon, whose services will also enable aircraft black boxes

to send information real time, could be taken public in the

future, the JV partners said.

"It's premature to (talk about going public) right now, but

that certainly is not ruled out in the future," Crichton said.

Nav Canada, a not-for-profit financed by publicly traded

bonds, said it would not raise additional debt to finance the

first tranche of its investment in the joint venture.

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