LOCAL authorities are planning to sell their controlling interest in Teesside Airport for only £500,000 to win £20m-worth of investment, The Northern Echo can reveal.

Officials insisted last night that they had struck the best deal possible.

The five local authorities who own Teesside Airport, near Darlington, are set to sell 75 per cent of their shares to Manchester-based company Peel Airports Limited.

Documents obtained by The Northern Echo show that Peel has offered to pay £500,000 for the shares. It will also contribute £100,000 towards the costs of doing the deal.

The report says the cost of transferring the airport could be as high as £500,000 - meaning the authorities may end up making only £100,000 between them.

Officials insisted last night that the deal was in the long-term interests of taxpayers and the airport.

They said the company had agreed to pump in £20m of investment - cash that is needed to give the airport a bright future.

And although taxpayers would no longer have a controlling interest in the business, the regional economy would benefit thanks to a much improved airport.

Teesside has been struggling to make headway against its big rival, Newcastle International Airport.

Bosses are hoping to sign a deal with a low cost airline to make it a more attractive prospect for holidaymakers after Newcastle clinched a deal with EasyJet.

The sale is due to be discussed in a private meeting by Darlington Borough Council next week.

Following the sale, Hartlepool, Middlesbrough, Stockton, Redcar and Cleveland and Durham county/Darlington councils will retain a 25 per cent share in the airport, which will eventually fall to 12 per cent.

No one was available to comment at Peel last night.

However, the company has promised to refurbish the main terminal building and construct a new parallel taxiway for aircraft serving a cargo depot.

It will also work with One NorthEast to create a 400,000 sq ft business park on a 25-acre site, complete with its own access road.

The company has said it would be happy to offer each of the local authority shareholders a seat on the airport's board.

The deal has been welcomed by the local authority shareholders who say without private investment, they could not afford to give the airport a much-needed financial boost.

The Teesside deal compares with the sale of 49 per cent of Newcastle Airport, which made more than £194m for the seven local authorities which own it.

John Williams, the leader of Darlington Borough Council, said Peel had a good track record, having already turned around the fortunes of Liverpool's John Lennon Airport.

He said the deal was the only way forward. "Anyone who uses the airport can see that it urgently needs major investment," he said.

"The £20m private sector investment will give Teesside Airport a future. Without this, it will be stuck in a cycle of decline which will eventually lead to its closure."

When Hugh Lang was appointed the airport's managing director at the end of 2000, he was faced with the task of stabilising the business.

The Northern Echo can now reveal that Mr Lang decided that investment of £12.8m was needed to make Teesside Airport competitive in the long term.

Councillor David Walsh, leader of Redcar and Cleveland Borough Council, said: "In the present situation, it is the only way the airport can get in the investment that it needs to prosper and grow. It has to be a calculated risk.

"There was no way that the local authorities would have the money at their disposal to turn it into an airport fit for the coming decades."

Teesside handles approximately 750,000 passengers a year.