"By the end of this month you can expect a decision to be taken on releasing Rs 1,200 crore towards restructuring Air India," sources said.
"The government intends to look at equity induction in a phased manner and based on the performance parameters of Air India," they said.
Civil Aviation Secretary M Madhavan Nambiar had met Finance Secretary Ashok Chawla last week and is understood to have discussed Air India's restructuring plan and other related issues.
A Group of Ministers, headed by Finance Minister Pranab Mukherjee, may also meet in a couple of weeks to deliberate on the steps taken by the National Aviation Company of India Limited (NACIL), the holding firm of Air India, to reduce costs and enhance revenue as part of its four-year turnaround plan.
Last month, Air India Chairman and Managing Director Arvind Jadhav had said that Air India operations will break even by 2015 after presenting the plan for financial restructuring and turnaround till 2014-2015 before the board of directors.
Under the restructuring plan, the national carrier will get working capital loans through a mix of bonds guaranteed by the government with longer tenor and bullet payments. The company may also sell or lease land and building to raise working capital.
Air India is also awaiting guidelines from the Reserve Bank on a debt restructuring package for the aviation sector. The carrier has been in talks with banks to get soft loans instead of high-interest ones.
The national carrier's passenger load factor in Q1 on the domestic sector was 75 per cent vis-a-vis 67 per cent last year and that on the international sector was 66 per cent vis-a-vis 62 per cent last year.
The carrier aims to fly 25 million domestic passengers and 15 million overseas passengers by 2015. It has also made plans to achieve operational restructuring goals, including achieving 75 per cent load factor, with a target passenger revenue of Rs 35,000 crore and non-passenger revenue of Rs 6,500 crore.