Air India says it has settled a “major portion” of dues owed to state-run oil companies and will pay the remainder today (Friday).
Oil marketing firms had earlier threatened to halt fuel supplies to the carrier from today for non-payment of fees.
Air India reportedly owes 2.6 billion rupees ($53 million) to three state-owned oil companies, according to reports.
It owes a total of more than $40 billion in unpaid fuel bills to public sector oil companies in India.
The airline said it had made some payments over the last two days and will pay another 400 million rupees by today.
An airline spokesman said last night: “We made some payment yesterday, some even today. We are well within the credit limit of oil marketing companies.”
Lenders to Air India, which is carrying debts of $4 billion, are undecided how to restructure its finances, as they are reluctant to accept equity in the airline and want the government to inject funds first.