BOSSES at a loss-making North-East airport have started work to galvanise the site.

A former hangar at Durham Tees Valley Airport is being demolished to help develop a near 10-acre site.

Aviation chiefs want to replace the hangar, which was also used as a sports and tennis centre, with a business park, capable of housing engineering, storage and distribution operations.

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The work on the large steel frame is being carried out by Stockton-based T J Thomson and Son, and airport owner Peel Holdings hopes it will help stem annual financial losses.

The airport loses about £2m a year and passenger numbers have fallen dramatically since 2007, when nearly a million people passed through its terminal.

The company wants to move the facility from a traditional transport hub to a more commercially-focused operation.

It also harbours proposals for up to 400 new homes on the site, underpinned by existing KLM flights to Schiphol, in Amsterdam, and Eastern Airways' shuttle services, which are used by offshore workers to travel to Aberdeen.

Bosses say any housing development would generate millions of pounds to re-invest in the airport, including nine new hangars, office space and industrial units to expand the Northside Employment Park.

Peter Nears, Peel's strategic planning director, said: “The old steel frame has been an eyesore for a long time.

“We acquired the site because it fitted well with the overall landholdings of the airport.

“We also believe it offers potential for a range of business opportunities, including aviation-related engineering, storage and distribution operations.

“We have had the structure assessed and, as it is not viable to be re-used, dismantling it is the best way forward.”

Mr Nears previously told The Northern Echo Peel was committed to ensuring the airport's future.

He said: “Everyone recognises that the past few years have been tough.

“But our master plan is all about ensuring we have the right business model to take the airport forward and reflect the significant changes in the market over the past decade.

“That is how we can best safeguard the airport and the vital services it provides, especially to the local business community who require international connections.”

Last year, the airport was snubbed for a second time by the Government in a bid for regional growth fund cash.

It submitted £4.65m plans to create an aircraft recycling, firefighter training and freight services zone on land south of the runway, which bosses said could have supported up to 1,400 jobs.

However, Deputy Prime Minister Nick Clegg turned down the application, saying ministers were not convinced the proposals could create jobs and investment quickly enough.