The UK's beleaguered National Air Traffic Services (Nats) may be close to a deal with airport operator BAA.

According to Nats chief executive Richard Everitt, BAA were looking into an investment of around £50m to £65m.

"BAA have indicated they will be prepared to make an investment in NATS," Mr Everitt told the influential House of Commons transport committee.

Nats was hoping to charge more fees to airlines

The potential investment by BAA would be matched by the government.

In March, the government provided £30m in emergency funding, as part of a £60m bailout.

Just two months later the UK's airports were thrown into chaos as a computer problem saw many flights grounded.

Mr Everitt said he regretted the inconvenience to passengers who had missed out on their holidays but insisted that compensation would not be forthcoming from NATS.

His colleague, Colin Chisolm said that the difficulties in May came about because of a series of unforeseen hitches which, were they to arise again, would be dealt with swiftly.

The problem began after a regular monthly computer upgrade at Swanwick, which controls most of the airspace across England and Wales.

It was the third time in two months flights have been delayed by air traffic control system problems.

Mr Everitt expressed confidence that Nats could resolve its financial difficulties although he warned investment might not be forthcoming unless they could change their charging formula.

Nats was hoping to increase the fees it charges airlines to use British air space.

Justified rises?

But the airlines were opposed to the rise in fees as many of them are also under severe financial pressure as they cope with the post-11 September slump in travel.

Nats applied to the Civil Aviation Authority (CAA) for an average increase of 5% per annum for three years, starting in January 2003.

But the CAA said at the time the rises were not justifiable, despite the cash-crunch at Nats.

The decision means the sum Nats can charge airlines is due to fall in real terms between now and the end of 2005.