Cash-strapped Air India is seeking nearly USD$1 billion from Boeing to compensate for delays in aircraft deliveries, a source with direct knowledge of the matter said.
Deliveries on the national carrier's 2005 order for 50 long-range Boeing jets worth about USD$6 billion has been delayed by more than 3 years.
Air India, burdened with a USD$4 billion debt, is facing a severe cash crunch and is banking on government support to continue operations.
Earlier this week, Indian media quoted Aviation Minister Ajit Singh as saying that Air India would proceed with the purchase of Boeing planes despite its troubles, subject to government approval.
Air India plans to lease out excess aircraft to cut its huge debt after the introduction of Boeing 787 Dreamliners into its fleet, a source said in November.
India's airlines are struggling with surging oil prices, high sales taxes on jet fuel and fierce competition that has resulted in cutthroat pricing, leading to massive losses.
Jet fuel costs in India are among the highest in the world, largely as a result of high taxes. Earlier this week, a government panel approved a plan for carriers to directly import jet fuel to cut costs.