A revival of Paramount Airways might happen, with a British court reportedly awarding it Rs 1,650 crore (Rs 16.5 billion) as compensation in a lawsuit.
The airline, grounded by the Directorate-General of Civil Aviation, is also said to be in talks with some foreign carriers.
The lawsuit issue was a dispute over payment, in a lease agreement with GE Capital Aviation Services and Celestial Aviation Trading.
Paramount's spokesperson had confirmed the compensation development but an email to the global director of communications for GECAS got no response.
Sources in the airline said once the money was made available,
"If all goes well, operations will re-start by early 2013-14," said a source.
The DGCA grounded Paramount in April 2010 after the company from which aircraft had been leased complained of default on payment.
Paramount had said the aircraft it was supplied had a manufacturing deficiency in the engine.
The matter was heard in courts here and then in London, by a court of arbitration, from where the latest order favouring Paramount has come, it appears.
Paramount had five leased aircraft but three of these were de-registered on account of default in payment and one for technical reasons.
However, DGCA had earlier said the company could restart operations.