The Indian Government is considering an infusion of equity into Air India, but only if the loss-making carrier saves 20 billion rupees ($430 million) this fiscal year.
The Government will assess the airline's performance at the end of this fiscal year ending March 31 2010 and decide on the amount of equity then.
"The airline has to show they can cut costs and save, and whatever help that's given will be based on those conditions," says a spokeswoman for India's civil aviation minister Praful Patel.
Air India posted a net loss of 56 billion rupees ($1.2 billion) for the fiscal year ending 31 March 2009, as it struggled with the financial downturn and higher fuel prices.
The carrier is looking at cost cutting measures and has put up 10 aircraft for lease.
Source: Air Transport Intelligence news