THE CANADIAN Government is refusing to make payments to Hughes Aircraft in a major dispute over the modernisation of the nation's air-traffic-control system.

Deputy minister of transport David Wightman says that the C$659 million ($464 million) programme is "up to two years" behind schedule, prompting the suspension of payments.

Hughes is expected soon to offer a revised schedule, but is also understood to be asking for additional money to complete the programme - now unlikely to be finished until late 1998.

The delay is also complicating the Government's plans for privatisation of the ATC system. The Government announced in February that it expects to sell the system's assets in 1996 to a non-profit group controlled by the airlines and their unions.

Hughes was not immediately able to comment.

Source: Flight International