State-owned carrier Air India will take delivery of seven Boeing 787s by March 2013.
The carrier expects to receive the first aircraft in May and the second in June, Air India chairman Rohit Nandan told reporters at the sidelines of the India Aviation air show in Hyderabad.
The deliveries come after more than four years of delay and the carrier is now in negotiations with Boeing about possible compensation.
"The issue of compensation is between us and the carrier," said Dinesh Keskar, president of Boeing India, when asked to confirm whether a $500 million sum had been agreed on.
Delays in the delivery of the 787s have caused Air India "a lot of problems in their plans and expansion", said the country's civil aviation minister Ajit Singh at a press conference.
He added that a financial-restructuring package for the loss-making carrier has been sent to the cabinet for a formal approval. The government is expected to pump rupees (Rs) 650 million ($13 million) into the carrier.
The loss-making carrier's restructuring will also include converting some of its short-term loans to long term ones and turning some debt into non-convertible deposits with interest guaranteed by the government.
"We will bail out Air India but not indefinitely. We can't keep paying unless they improve," said the minister.
He added that the government "cannot and will not bail out Kingfisher" and said some of the country's other private airlines are in dire straits.
Air India will use the equity infusion from the government to pay for employee salaries, dues to fuel companies and airport operators and other debts, said Nandan.
Source: Air Transport Intelligence news