The PSU airline is also planning to adopt innovative borrowing structures, including sale and leaseback programmes, which are popular aircraft financing methods for private domestic airlines.

Air India has already floated enquiries calling for bids from banks and financial institutions for the second round of aircraft deliveries beyond December 2007 up till March 2009, and also pre-delivery payments for aircraft and spare engines to be delivered during 2008-09.

The airline will have to pay 15 per cent of the total agreed amount as advance in the form of PDP and 85 per cent as delivery financing.

S Venkat, executive director (finance), Air India said, "The financing packages have been invited for Exim Bank (of the US) guaranteed facility for $1.06 billion and commercial facility of $181.85 million for 10 aircraft, comprising a combination of Boeing family aircrafts, including B777-200 LRs, B777-300 ERs and B787s."

"The PDP facility has been invited for 14 aircraft amounting to $467.25 million," he added. 

Venkat said the airline was also examining financing packages from banks which are not based on US Exim Bank or Indian government-backed sovereign guarantees.

However, he declined to comment whether the PSU carrier would opt for sale and leaseback.

But sources said the airline had already executed a sale and leaseback agreement for old aircraft, adding, "Air India is also looking at similar agreements for brand new aircraft."

A similar enquiry has been floated for financing five B737-800 aircraft and 3 spare engines, to be delivered during the period between January 2008 and January 2009, for an amount of $200 million (85 per cent component), and for a commercial facility of $43.8 million for Air India Charters, which runs the international low cost carrier Air India Express.

Air India had earlier invited enquiries for financing the first tranche, comprising 17 aircraft (10 for Air India and 7 for Air India Express), of nearly $1.4 billion for which the US Exim Bank has already issued a firm commitment.