A decision to infuse Rs 1,200 crore as equity in the ailing Air India is likely to be considered by a Group of Ministers soon.

“There is no rethink on the announcement made by the government that Rs 1,200 crore will be infused. The Group of Ministers will meet soon,” an official source said on Sunday.

Members of the GoM, headed by Finance Minister Pranab Mukherjee, were cognizant of the fact that the issue needed to be addressed in an expeditious manner, given the critical financial health of the airline, the source said.

According to the sources, in a proposal several months ago, the national carrier had sought the infusion of Rs 10,000 crore.

The proposal was examined by the Committee of Secretaries, led by Cabinet Secretary K M Chandrasekhar, and it was decided to provide Rs 2,000 crore to the airline.

The government had also asked the airline to take stringent cost-cutting and revenue-enhancing measures to strengthen its financial bottomline.

Out of Rs 2,000 crore planned to be given to the airline, Rs 800 crore was granted in February.

Most of the remaining amount of Rs 1,200 crore is expected to be used to settle outstanding dues and not to enhance the airline’s equity base, the sources said.

The Finance Ministry has sought clarifications on certain matters from the Civil Aviation Ministry, which have been given.

The Cabinet proposal for the Rs 1,200 crore equity infusion has also been re-worked in that context, the sources said.

The audited financial results for 2009-10, approved by the Board recently, showed that Air India’s losses have come down by 23 per cent to Rs 5,551 crore in 2009-10 from Rs 7,189 crore in the previous financial year.

As a result of several cost-cutting measures, the airline’s total expenditure decreased by eight per cent from Rs 20,668 crore to Rs 19,035 crore, though its total revenue remains almost stagnant, the figures showed.

The airline has also been in turmoil following the sacking of Pawan Arora as the Chief Operating Officer for its low-cost subsidiary Air India Express, less than two months after his appointment.

The Air India Board has also set up a committee to study the procedural aspects appointing Stefan Sukumar as its Chief of Training.

A decision on the appointment is expected at the next meeting of the airline’s Board.