Stephen Byers oversaw the part sell-off of Nats

Earlier in the day, a representative of one of Nats' bankers told BBC News Online: "It is not in our interests for Nats to go into administration... We would lose money."

"We will continue to be supportive and to find a solution whereby the business can continue to operate."

For its part, Nats has denied that it is on the brink of bankruptcy or that it has lost the support of its financial bankers.

Nats chairman Chris Gibson-Smith told BBC Radio 4's World At One programme: "The central story that the banks are about to pull the plug is not true."

Dr Gibson-Smith said the company was covering its losses by accelerating plans for �200m of cost cuts and by asking to be allowed to raise its fees by 5%.

Nats' bankers include Barclays Capital, Abbey National, Halifax and Bank of America.

Major needs

The company is said to need tens of millions of pounds to continue operating. It currently has a loan facility of �1.5bn and drew down half of it to buy its own equity during the privatisation.

Nats' board was attending a monthly meeting on Tuesday, where the finance director was expected to have updated the company's board members.

Dr Gibson-Smith said the meeting was "routine" and was not held to discuss financial difficulties.

The bank representative said no banks would be present at the meeting.

A sustainable business

The banks are also keen to help the company construct a sustainable business model and sort out its finances.

"Nats is certainly short of cash and we need to find out how we can help there," the bank representative said.

Nats has been in negotiations with its lenders for some time and talks will continue following the monthly board meeting.

Dr Gibson-Smith said the banks had been supporting the company and believed it had a "strong future".

Going forward

Nats is also attempting to increase the fees it charges airlines to use British air space.

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

Nats is looking to charge more fees to airlines

Nats' chairman has already said "the dramatic decline in traffic following the September 11 attacks on the United States" made the application necessary.

The rise compares to 15% hikes in charges in other parts of Europe.

Pending approval from the CAA, it would be some months before the increases came into effect.

"It would be wrong to rely on just one move," the bank representative added.

"But it will be a long way before administration becomes an issue."

A group of seven airlines - including British Airways, Virgin Atlantic and Easyjet - has owned 46% of the company since July 2001.

Nats makes three-quarters of its revenue from "en route charges" based on aircraft size and distance flown.