Air India focused on day-to-day survival as shutdown fears bite

India's debt-crippled national airline is focused solely on daily survival and keeping its flights in the air, a spokesman said Thursday, after the government warned it would have to shut down unless a buyer was found.

Air India owes more than $8.6 billion and has struggled to pay salaries and buy fuel, with losses mounting following earlier privatisation attempts.

The company is unable to pay its debts and its outlook is "gloomy", spokesman Dhananjay Kumar said.

"We are concentrating on day-to-day operations and not focusing on the future," he told AFP.

"Whatever resources we have, we are trying to use them in an optimum manner and trying to run our flights."

Aviation minister Hardeep Singh Puri said Wednesday that the airline would "have to close down if it is not privatised", adding the government would soon invite takeover bids.

The company's debt mountain may be hived off in a bid to make it more attractive to potential buyers, according to media reports.

Kumar said Air India was not yet in discussion with the ministry over any shutdown plans. But in more bad news for the beleaguered airline, a planned sale of the Air India headquarters in Mumbai may be blocked after Prime Minister Narendra Modi's party was ousted from power in Maharashtra state, local media reported.

The previous state government had agreed to buy the building to help clear the airline's debts.

Founded in 1932 and formerly India's monopoly airline, the company was once known affectionately as the "Maharaja of the skies".

But it has been haemorrhaging money for more than a decade and has lost market share to low-cost rivals in one of the world's fastest-growing but most competitive airline markets.

State-run oil companies halted fuel supplies to Air India in August over delinquent payments. The firms agreed to lift the suspension the next month after talks brokered by the government.

The local aviation sector has been stuck in a slump since the collapse of Jet Airways earlier this year.

Successive governments spent billions of dollars to keep Air India operating before the first failed bid to sell off the airline last year.