A multi-million pound investment in the State's main airports will be announced today as a new report on Aer Rianta's future recommends that the company sell off its non-core assets, including its Great Southern hotel chain.

The report, prepared for the Aer Rianta board also says the State airports operator should be floated and urges the Government to appoint a regulator to rule on landing charges.

The report will be presented to the Minister for Public Enterprise, Ms O'Rourke, this afternoon. It is understood the report advises that the company concentrate on seeking investment opportunities abroad by involving itself in the management and running of other airports.

It also suggests Aer Rianta should continue to seek opportunities to run duty-free franchises outside Europe.

Duty-free between EU member-states is due to be abolished on June 30th, but there is a German proposal to extend it in limited form until the end of 2001.

The report, prepared by Investment Bank of Ireland, Lehmann Brothers and Andersen Consulting, following a request by Ms O'Rourke, assumes the abolition of duty-free.

It is understood that the report says Aer Rianta will require cash for future major capital investment and will need at least to double its current investment programme in its Irish operations where it is spending around £250 million, adding new facilities to Dublin, Cork and Shannon.

Passenger numbers through the airports are increasing and Aer Rianta is likely to try to add more facilities, including extra shopping and airport car-parking.

Duty-free revenues will need to be replaced, the report says. It is understood to recommend an increase in landing charges and to conclude, despite Ryanair's protestations, that current charges are not expensive compared to other European airports.

It states, however, that the best way to deal with the issue is to appoint a regulator - similar to the telecommunications regulator - to adjudicate on this and other matters, before a flotation.

It says landing charges are key to the company's future and there should be a "fair charge" for airport users. Landing and parking fees generated income of £13.9 million for Aer Rianta in 1997.

The report recommends the sale of non-core assets to raise equity. It says the Great Southern Hotel chain should be sold, but stresses the hotels should not be disposed of as a block. The best way to realise their full value is to sell them separately.

Among its non-core assets is the Great Southern hotel chain, which includes the flagship hotel at Parknasilla, Co Kerry, two in Killarney, one in Galway and one in Rosslare, Co Wexford.

The company also runs a catering college. The hotels made £2.9 million profit in 1997, the latest figures available.

These profits are expected to have risen in 1998, given the tourism boom and the expansion of the chain - it recently opened an outlet in Dublin Airport.

The hotels could fetch more than £50 million.

Aer Rianta has several investments abroad including a share of a 50 per cent shareholding in Dusseldorf Airport, Germany, for which it paid £35 million. It also has a 40 per cent stake in Birmingham Airport in Britain, where it provides airport management expertise.

Aer Rianta also runs duty-free ventures in Russia and the Ukraine, as well as Bahrain.

Last year it bought a duty-free chain in Canada, the United Cigar Stores, for £13 million.

The report is understood to recommend that Aer Rianta continues to target such opportunities abroad and says a public share offering is the way to raise equity.

But it is thought the report does not recommend how much of Aer Rianta should be floated or when - that would be a decision for Government.