Debt-ridden Air India has started defaulting government guaranteed loans to bans and aircraft lessors, Business Standard reported.

Over the last few weeks, three banks and two aircraft leasing companies have issued default notices to the airline, threatening legal action if the dues are not paid, the report said citing sources.

According to a communication reviewed by Business Standard, US-based Wells Fargo Trust Services, a trustee of Air India, has served a letter of demand to Air India, saying that 'an event of default' has occurred as the airline has not paid lease rental payments for over two months on three Boeing 787 Dreamliner aircraft.

The situation has turned grim as the government has not made any commitments in infusing cash into the airline after the privatisation process did not bear fruit.