Derry City Council has taken the first steps towards bringing private investment to City of Derry of Airport.
A holding company will be set up with the council retaining 100% of the shares.
As part of the reforms the council are conducting a market test, to seek expressions of interest from private investors.
The chairman of the airport committee, Colm Eastwood, said the current level of public subsidy is unsustainable.
"Reform is driven by our commitment to reduce annual public subvention of £3.5million, a need to strengthen the airport's commercial performance and a requirement by government to establish a new governance regime.
"The airport business plan demonstrates the capability for long-term revenue and passenger growth and we must make decisions that enable the airport to operate effectively in a very competitive environment.
"However, the continuation of public subsidy at its current level is unsustainable and it is essential that Council progress steps to reduce this level of subvention," Councillor Eastwood added.
"Our aim is to ensure the region has an affordable and successful airport and this sequence of reform will safeguard investment and growth."
Under the new holding company structure Derry City Council will be 100% shareholders in CODA (holdings).
The CODA company will own two subsidiaries that will operate the airport and hold the lands and facilities that make up the airport.