Looking to raise $429 million as loans towards advance payment for 22 of the 68 aircraft it proposes to buy from Boeing, Air India on Tuesday floated two tenders inviting bids from banks for the purpose.

"We have invited tenders and January 6, 2006 is the last date for submitting bids. By the end of January, we will finalise the bank from where we will take the loan," AI general manager S Venkat said.

One tender is to raise $306 million for AI, while the other seeks to raise $123 million for its low-cost subsidiary, Air India Express.

"We have to make an advance payment for the first 22 aircraft, which will be delivered between 2006 and 2008. These include 12 Boeing 737-800s for AI Express and five Boeing 777-200 LRs and 11 B777-300 ERs for AI," he said.

The loans will have a six-month tenor, which may be raised in national or foreign currency or a mix of both, he added.

This loan would meet about 15 per cent of the total cost of the fleet acquisition, while the remaining would be on the bank guarantee from the Exim Bank, Venkat said.

The airline is also planning to tap the capital market with an initial public offer next year to fund the expansion plans.

An empowered Group of Ministers (eGoM) last week had cleared AI's aircraft acquisition plan from the American aerospace firm Boeing in a deal valued at nearly Rs 35,000 crore (Rs 350 billon).

AI will be buying 68 Boeing aircraft, including 27 Boeing 787s, 8 B 777-200 LRs and 15 B777-300 ERs for AI and 18 Boeing 737-800s for AI Express.