Mumbai: MC Aviation Partners Inc., the wholly owned aircraft leasing unit of Japan’s Mitsubishi Corp., said it will decide after 21 February on whether to repossess five Boeing Co. 737 planes it has leased to cash-strapped Jet Airways (India) Ltd.

Jet Airways, which has lease rentals overdue with MC Aviation, has convened an extraordinary general meeting of shareholders next week to decide on a proposal to convert a portion of its large debt into equity.

“Jet Airways hasn’t paid dues to MC Aviation Partners since October 2018," a senior official of the leasing firm said on Wednesday. The official declined to be named.

Shareholders of the Mumbai-based airline will vote on a proposal on 21 February to raise its authorized share capital from 200 crore to 2,200 crore through a special resolution. The step will allow the debt-laden airline to issue fresh shares to lenders—a much-needed financial lifeline. It is, however, expected to reduce the holdings of promoter Naresh Goyal, and Etihad Airways PJSC of Abu Dhabi, who currently hold stakes of 51% and 24%, respectively.

Jet Airways has been struggling with cash flows for the past six months due to higher fuel costs and intense competition that has forced the carrier to keep fares low to match those of its rivals. The cash crunch forced the airline to delay salaries to pilots, lessors and interest payments on its debt. Jet Airways defaulted on payments to a consortium of lenders led by State Bank of India on 31 December.

The financial woes also led Jet Airways to halt deliveries of six new Boeing 737 Max planes that were due by March. The airline has a total of 123 aircraft, including five Boeing 737 Max planes.

The official at MC Aviation said Jet Airways had also defaulted on paying aircraft lease rentals in 2013. “We hope that they are able to sort the situation quickly," the official said, without disclosing the overdue amount of the carrier.

A Jet Airways spokesperson declined to comment on individual relationships with aircraft leasing companies. “Considering the partnership with our vendors, we have been able to continuously reach agreements for certain past due payments," the spokesperson added.

Mint reported on 29 January that Jet Airways was forced to cancel several domestic flights after lessors grounded some aircraft due to delay in payment of lease rentals.

The Jet Airways board will meet today to consider the December quarter earnings.

On Wednesday, Jet Airways shares gained 1.25% to 223.60 apiece on the BSE while the benchmark Sensex shed 0.33% to end the day at 36,034.11 points.