The airline has invited proposals from the banks and financial institution to raise these funds.
"Air India invites offers from banks/financial institutions to arrange bridge financing upto $500 million for induction of 4 B787 aircraft," according to a document posted on the airline's website.
The airline needs interim bridge financing for a 6-12 month period to acquire four Dreamliner aircraft, which are to be delivered to it between June December 2012, it said.
However, the funds sought to be raised would not be covered by a sovereign guarantee and instead the airline would offer the aircraft or some other equivalent collateral as security, the document stated, adding airline would repay the loan after selling and leasing back the four planes.
Besides, the airline has also floated an "invitation of offers" for raising funds upto $600 million through the external commercial borrowing (ECB) route to meet its working capital requirements.
It is seeking to raise funds for at least three-year period at either a fixed or floating rate, according to the offer document.
Of this, up to $300 are to be raised for its wholly-owned subsidiary, Air India Charters, which operates its low-cost international arm, Air India Express.
The government had in April allowed domestic carriers to raise up to USD 300 million each from the overseas markets during this fiscal to meet working capital needs.
Last month, the government had approved Air India's turnaround plan and a financial restructuring plan (FRP) which involves a Rs 30,000-crore equity infusion by the government over the next eight-year period and a debt recast (CDR) of Rs 21,200 crore.
The financial restructuring plan will provide relief to Air India from its debt servicing obligations on working capital loans by way of substantial reduction in interest outgo, while giving it necessary time to improve its operational efficiency.
Air India posts healthy growth revenue
Pilots' parity row: HC verdict on Friday
AI revival plan: Rs 30,000 crore equity over 9 years
AI strike: 10 agitating pilots sacked, union de-recognised
RBI asks banks to improve NPA management