Air India has been for a long time asking the government to settle the arrears. According to officials at the civil aviation ministry, the government is likely to pay a part of the dues.

A meeting of the Group of Ministers is going to happen today led by finance minister, Pranab Mukherjee. The panel will look into the matter and may infuse funds to improve airline's financial position.

Latest estimates show that AI was facing a net cumulative loss of Rs 20,320 crore between April 2007 and March 2011. Its debt burden is around Rs 46,950 crore -- Rs 20,185 crore worth of aircraft loans, Rs 22,165 crore working capital loans and over-dues of Rs 4,600 crore. Its cumulative loss and debt burden comes to Rs 67,270 crore.

To overcome the losses, the airline is expected to demand of over Rs 8,000 crore equity support for this fiscal —Rs 6,600 crore as upfront equity and Rs 1,772 crore on repayment of loans — before the Group of Ministers (GoM) during the meeting today.

The GoM is also expected to propose the equity infusion of Rs 1,200 crore into the airline in a couple of weeks.

OneIndia Money