Mumbai: Lenders to Jet Airways (India) Ltd have refused funding to the cash-strapped carrier, according to people familiar with the situation, forcing the nation’s oldest surviving private airline to consider a temporary shutdown.

Bankers have confirmed that there’s no money coming in for now, the people said asking not to be identified as the matter is not public.

Jet Airways executives, including operational heads, are meeting in Mumbai Tuesday to take a call on complete halt of operations, according to two persons in the know, even as the failing airline scrambles to get a new investor.

A spokesman for the airline declined to comment.

Jet Airways, which broke into the monopoly of state-run Air India Ltd in the early 1990s, went in a tailspin after a slew of budget airlines started offering ultra-low fares which hurt its profits and led to a mountain of debt over the past decade. It’s now burdened with more than $1 billion in debt and unpaid dues to its employees and leasing firms.

Jet Airways' shares tumbled as much as 18.5% on Tuesday and closed 8.1% lower at 240.5. S&P BSE Sensex advanced nearly 1%.

Agitating Pilots

The airline is now flying just seven planes, one of the people said, compared with 123 aircraft as of end-December, according to a company presentation. It was forced to ground 10 planes last week, suspend international flights and has seen pilots agitate over non-payment of salaries. The carrier has reported losses for four straight quarters despite the revenues holding up.

The Jet Airways crisis threatens the loss of about 23,000 jobs and is reminiscent of the fate suffered by Vijay Mallya’s Kingfisher Airlines Ltd, another indebted airline that had to be grounded and whose flashy fugitive founder India is still trying to extradite from London.

Jet Airways’ crisis also comes at an awkward time for Prime Minister Narendra Modi who’s battling a slide in popularity over rising concerns of unemployment and seeking a re-election bid in 2019 Lok Sabha elections. The government had tried to help the ailing Jet Airways by asking other carriers to consider taking over a few of its aircraft.

Bloomberg's Debjit Chakraborty contributed to this story.

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