According to two Air India executives, who asked not to be identified, Deutsche Bank will buy four planes while Investec will buy one.

Emails sent on Monday to the two lenders remained unanswered at the time of going to press.

A sale and leaseback is common in the airline business. Airlines sell their planes to a lender, a process that helps them generate revenue, and then lease the same planes for a fee.

“Sale and leaseback of planes will give us upfront liquidity. Besides liquidity, the balance sheet of airline will also look strong,” said one of the Air India executives.

This is not the first time Air India is sealing such a deal with Deutsche Bank and Investec. In the past, Deutsche Bank has bought three Dreamliner planes from Air India while Investec had bought four. Air India is planning to execute a sale and leaseback of five more Dreamliners.

Air India will post an operating loss of Rs.2,100 crore and a net loss of Rs.3,900 crore for the year ended 31 March, Mint reported on 17 March.

Air India is also leasing at least 30 planes to compete with domestic and international rivals.

The state-owned airline has leased five Airbus A320 planes from China Aircraft Leasing Group Holdings Ltd for domestic operations with a single-class configuration, said the first Air India executive. China Aircraft Leasing did not reply to emails seeking comment. Air India has plans to bring in another 17 Airbus A320 aircraft to boost its domestic operations.

The executive said the airline has also leased two small ATR-72 planes from a UK firm and three such planes from General Electric Co.’s aircraft leasing unit. These five small planes would used for Alliance Air, the regional airline unit of Air India.

“We are also looking at leasing seven Boeing 737 planes for our international budget airline Air India Express. All these planes would be single-class economy configuration to compete with low-fare airlines of India and abroad,” the second executive said.

Air India posted a net loss of Rs.5,100 crore in 2012-13 and a net loss of Rs.7,100 crore in 2011-12. It is in the midst of a Rs.30,000 crore government bailout programme.

“Air India will stay afloat because the taxpayers’ money will continue funding it. Unless someone like Prime Minister Narendra Modi steps in and appoints someone strong to take tough decisions and stem the losses, there is nothing to stop Air India from bleeding. Sale and leaseback, and leasing of airplanes is not a bad thing for them to do, though,” said independent consultant Bharath Mahadevan.

Still, such initiatives (sale and leaseback) and leasing of planes won’t help it compete with the private airlines in a sustainable way, he added. “It needs a massive restructuring of costs first and strategy next in order to compete,” he said.

On Monday, Reuters reported that the government is mulling a proposal to shut down some loss-making state-owned companies, risking a conflict with powerful trade unions. Cabinet secretary Ajit Seth has called a meeting of top officials to consider what to do with 10 firms that made a combined net loss of $4 billion in 2012-13, Reuters reported.

The list includes Air India, Bharat Sanchar Nigam Ltd, Mahanagar Telephone Nigam Ltd, Hindustan Photo Films Manufacturing Co. Ltd and Hindustan Fertilizer Corp. Ltd, according to a note prepared by the department of public enterprises.

The second Air India executive said the airline is doing all it can to cut costs and generate revenues. “However, Air India is behind the schedule in leasing more planes according to TAP (turnaround plan) set by the finance ministry to qualify for the bailout programme,” he said.

He added that Air India need to redesign the TAP reflecting the current market dynamics. He did not specify the number of planes required as per the TAP.