The government will extend soft loans to the national carrier, Air India to enable it recover from the heavy debt burden.

The debt load of the airlines almost doubled to Rs15,200 crore in June, following the borrowings it made to pay for 49 aircrafts purchases from Airbus and Boeing.

Following this, the orders for new Airbus SAS and Boeing Co. planes were either delayed or cancelled in attempt to rip off the mounting costs. The company has been also resorting to routes cut and layoff of contract workers.

Last month the company delayed monthly payment to its 31,000 employees. The estimated loss is around Rs 5,000 crore in this fiscal 2009.

The airline has also urged the associated banks to roll over the due working capital borrowings. The company has been seeking increase in credit advances from the supplier oil companies.

Commenting on the severity of situation, civil aviation minister Praful Patel, said, "Air India's financial position is a matter of concern and its board will shortly submit a revival plan to the government."

"The government in the past has never assisted Air India, which has an equity capital of Rs145 crore, It's in this background that an equity infusion and soft loan by the government as a measure of softening the adverse financial situation is contemplated," he added.

Stating that the market conditions are non-conducive and uncertain, the minister said that the plan to float initial public has been held back.

The extend of soft loan was however not revealed by the minister.