New Delhi: The government on Friday said it would take three months to finalise the financial restructuring plan of cash-strapped national carrier Air India.

“The exercise of finalising the financial restructuring plan and restructuring of loans would take about three months,” Civil Aviation Minister Vayalar Ravi told the Lok Sabha in a written reply. 

Ravi's reply comes just a few days ahead of a crucial meeting of a ministerial panel headed by Finance Minister Pranab Mukherjee.

It is looking into Air India's turnaround and financial restructuring plans that have been prepared by the State Bank of India's financial advisory arm, SBI Caps.  The panel's next meeting is scheduled for August 17. 

The debt-ridden carrier had earlier sent a proposal to the civil aviation ministry for  permission to convert its short term loans into long-term ones, thereby saving interest payments of up to Rs 1,000 crore per annum. 

Air India was also involved in talks with public sector banks led by the SBI for restructuring its working capital loan of around Rs 22,000 crore. 

Currently, the cumulative losses of the carrier amounts to Rs 22,165 crore; the airline is also burdened with a debt of Rs 22,000 crore, which was borrowed to buy the new aircraft.