Air India believes it is an "operationally viable" airline as compared to two years ago, but is still concerned about its financial situation.
In a televised interview, airline chairman and managing director Ashwani Lohani says that despite making an operating profit of Rs1.05 billion ($15.7 million) for the 2016 financial year and forecasting that it operating profit will grow threefold in its next financial year, the carrier's financial situation "has not stabilised at all".
"We still have a huge amount of money needed to be repaid as interest for borrowings due to past years of losses, amounting to Rs40 billion annually."
"That is what's pulling us down," Lohani adds. "We are an operationally viable airline, but not financially viable."
Lohani says that Air India's international network expansion as a "greater asset" to feeding its "even faster growing" domestic network. He also reveals that the Star Alliance carrier is eye new routes to Africa, and more Middle East destinations like Tel Aviv.
"Our passenger occupancy (load factor) is quite encouraging and we believe that we can grow even more. There are not many full-service airlines in India and we are quite special."
Data from India's director general of civil aviation shows that on domestic air travel for the first three months of this year, Air India's load factor came in at 79.7%, behind SpiceJet (85.7%), Vistara (85.1%), GoAir (81.8%) and Jet Airways (80.7%).
Jet Airways and Vistara are the only two mainline full-service carriers in India.
On Air India's impending divestment, Lohani believes the carrier's staff should have no worry about layoffs.
"Whoever runs Air India will require commercial staff, engineers, pilots and cabin crew. Based on our expansion rate, we are still under-staffed."
He is confident that the divestment will help Air India with a "complete turnaround", but acknowledges that the carrier's accumulated debt of Rs550 billion "will not be easy to handle."
In late June, New Delhi gave in-principle approval to privatise Air India and five of its subsidiaries. So far, only low-cost juggernaut IndiGo has expressed a formal interest in acquiring Air India's international operations.