Indian state-run airline, Air India Ltd, will cut its order of Boeing Dreamliner jets by more than half, the Economic Times reported on Wednesday citing an unnamed government official, as the cash-strapped carrier reels under billions of dollars of debt.

Air India's board has recommended buying 12 Dreamliners compared to an original order in 2005 for 27 aircraft at a cost of around US$4.1 billion, the newspaper reported a senior civil aviation ministry official as saying.

A group of ministers led by finance minister Pranab Mukherjee will meet on Thursday to decide on a turn-around plan for the ailing carrier. India's civil aviation minister has previously said the airline cannot afford 27 Dreamliners.

Boeing's 787 Dreamliner made its first commercial flight on Wednesday as the firm looks to move on from glitches and setbacks in delivering the carbon-composite aircraft to carriers who have endured years of delays.

China Eastern Airlines on October 17 terminated an order for 24 Dreamliners rather than wait for production to pick up, while Air New Zealand voiced concerns over possible further delays and said it is seeking compensation from Boeing.

An Air India spokesman told Reuters the company will communicate as and when any final decision is made on the orders, but that there was no fresh development as of now.

Air India has struggled under a bloated cost structure and stiff competition from nimbler rivals in a crowded aviation market. All of its international routes were loss-making in 2009-10, a September government report said.

The national carrier, with total loans of US$9.5 billion, is in talks with banks to restructure US$4 billion of working capital debt and is implementing a turn-around plan to cut costs by redeploying staff and disposing of non-core real estate.

India's federal auditor criticized the airline last month for buying too many Boeing jets and imposing an "undue long term financial burden on the carrier," which is expected to post a pre-tax loss of 70 billion rupees (US$1.4 billion) for the year ended March.

Boeing said last month it expects to break-even on the Dreamliner this decade. The company releases its latest earnings in the United States on Wednesday.