American International Group Inc's aircraft leasing unit is in talks over a $5 billion credit line from the New York Federal Reserve that could be used to facilitate its sale, the Financial Times reported on its website late on Tuesday.

People close to the situation told the paper that discussions between International Lease Finance Corp (ILFC), AIG and the New York Fed were still ongoing and no decision had yet been taken on whether the facility would be provided or how big it would be.

The credit line from the Fed would come from the billions of dollars worth of loans the monetary authorities have already extended to troubled insurer AIG, the paper said, citing people close to the situation.

Reuters' efforts to contact the New York Fed and AIG out of regular office hours were unsuccessful.

ILFC, one of the world's largest aircraft leasing companies, is one of the units AIG has put on the auction block. Private equity firms are eyeing the firm, and a buyer could get financing help from AIG under revisions to AIG's U.S. financial rescue in March.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)

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