As part of the disinvestment process, which has been shelved for now, the government had proposed creating a special purpose vehicle wherein the non-core assets and "unsustainable debt" would be transferred there.
The official said that proposal and encashing the non-core assets are being pursued as it would also help the airline stand on its feet.
"This was also proposed for Air India when we had gone for hunting of proposed bidder for Air India," the official added.
The national carrier's debt burden was more than Rs 480 billion (Rs 48,000 crore) at the end of March 2017.
It is staying afloat on a bailout package extended by the previous UPA regime in 2012.
In the current financial year, the airline has received an equity infusion of Rs 6.5 billion (Rs 650 crore) up to June. TAP and a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012.
Last month, the government sought Parliament's nod for Rs 9.8 billion (Rs 980 crore) as supplementary grants for equity infusion into the airline.
According to the official, there is no plan "as of now" to make additional capital infusion into Air India.
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