Stephen Nelson, the man responsible for running Britain's crumbling airports, will receive a payoff of at least £1 million after being asked to step down.

Mr Nelson, the chief executive of BAA, resigned yesterday after less than two years in charge of the troubled airports operator.

BAA, which owns Heathrow, Gatwick and Stansted, has been criticised for the poor service offered to passengers and the poor state of its terminals.

Airlines have accused the company of running shopping centres with runways attached rather than airports that make the travelling experience as comfortable as possible.

Mr Nelson is understood to have been asked to step down by Sir Nigel Rudd, who became chairman of BAA last October.

He will be replaced by Colin Matthews, former chief executive of the water utility Severn Trent.

Mr Matthews is regarded as the technocrats' troubleshooter and he will be told to refocus BAA's efforts on day-to-day operations rather than on new retail projects.

He will also use his regulatory experience to seek a better deal from the UK's aviation and competition authorities.

Mr Matthews will not join BAA until April, so Mr Nelson will remain in charge during March.

This will include the opening of Heathrow's Terminal 5, BAA's most important project of recent years.

Mr Nelson is likely to get a year's pay plus bonuses and pension benefits. His basic pay has not been revealed but is understood to be in excess of £700,000 a year.

Bonuses and non-compete clauses should take this beyond £1 million.

He said: “While BAA faced considerable challenges during my period as chief executive, I am immensely proud both of the way the company responded to those challenges and refocused its efforts to put the passenger first.”

BAA was bought by Ferrovial, the Spanish infrastructure company, in 2006 for £10.3 billion.

The company has since been burdened by enormous interest payments and it has spent the past six months trying to refinance its debt.

The refinancing has entered a critical stage and if BAA fails to secure a new facility, the company's credit rating could be moved to junk status, meaning that it would be unable to raise more money.

BAA has also faced unexpected difficulties since its takeover. Security alerts and new baggage arrangements have caused havoc for passengers.

BAA was slow to address the problems, which resulted in long queues at security checks.

Mr Matthews is seen as a safe pair of hands, which will be important for BAA, where regulatory complexity goes hand-in-hand with an almost daily need for damage limitation.

Sir Nigel, who was responsible for his appointment after a discreet recruitment exercise, has not worked directly with him before.

Mr Matthews is understood to have been recommended by Sir John Parker, the chairman of National Grid.

In the past 11 years Mr Matthews, an engineer by training, has spent no more than two years in any one job.

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