The Federal Aviation Administration has accepted for review a proposal by Chicago to participate in a pilot program that would allow the city to lease Midway Airport to private operators, Chicago officials said on Wednesday.

"This acceptance ensures the city can continue moving forward in the pursuit of a potential Midway concession and lease," said Dana Levenson, Chicago's chief financial officer, in a statement. "It is the next of many necessary steps the City will take over the next several months as we pursue this potential transaction, which we believe could provide great benefit to Chicago's taxpayers."

Chicago applied in September to the FAA's program, which allows for participation by up to five airports. The city's application was slotted for the program's sole major commercial hub airport participant, the city's statement said.

The FAA informed the city its preliminary application "meets the procedural requirements described in the FAA's notice and has been accepted for review," according to the statement.

The move by the FAA authorizes Chicago to move forward in its process to craft an agreement, select a private airport operator and submit a final application to the FAA, the statement said.

Final approval by the FAA and by airlines operating at Midway was needed to complete any lease deal.

Chicago assembled a legal and financing team earlier this year to explore a Midway lease. The city gained USD$1.83 billion in 2005 from a 99 year lease for its Skyway toll bridge and is in the process of seeking qualified bidders for four parking garages.

Under an Illinois law that opened the door to an airport lease, most of the net proceeds would be used for new capital projects or pension contributions. In May, Levenson warned of falling funding ratios for the city's four employee pension funds.