Signage for Jet Airways India Ltd. is displayed at the airline's headquarters in Mumbai, India, on Monday, April 15, 2019. Picture: DHIRAJ SINGH / BLOOMBERG
Signage for Jet Airways India Ltd. is displayed at the airline's headquarters in Mumbai, India, on Monday, April 15, 2019. Picture: DHIRAJ SINGH / BLOOMBERG

Mumbai — Jet Airways shares plunged on Tuesday amid reports the board of the stricken Indian airline would suspend all operations after lenders refused to release emergency funds to keep the carrier flying.

An emergency board meeting was called for on Tuesday after the latest blow to the debt-laden company, which is teetering on the brink of collapse. Thousands of passengers have been stranded in recent weeks after the airline, which has debts of more than $1bn, cancelled international flights because it cannot pay its bills.

CEO Vinay Dube called the board meeting after lenders led by the State Bank of India (SBI) failed on Monday to agree to give emergency cash. “The management will seek guidance from the board on the next steps forward,” Dube said in an e-mail to staff late on Monday as he announced that the cancellation of international flights was being extended to Thursday.

Shares plummeted about 19% on the Bombay Stock Exchange’s Sensex index as the exchange sought clarification from Jet over a CNBC TV18 report that the airline was “likely to temporarily shut down its operations”.

Jet’s share price is now worth barely a third of its value of 640 rupees (US95c) of one year ago.

Indian dailies and news channels said suspending all flights was one option open to the board, although this could mean Jet would lose its operating licence. Business Standard quoted sources saying the airline had only enough fuel to keep its seven remaining jets running until Tuesday afternoon.

An official from the National Aviation Guild, the union for Jet pilots, told AFP: “The airline is flying seven planes right now. The minimum number to keep its scheduled operations licence.”

Jet has been in a tailspin for months. Its fleet has been cut from about 120 in December. It has defaulted on loans and most staff have not been paid for many months.

A consortium of lenders took control of Jet in March, pledging to give $218m of “immediate funding support” as part of a debt resolution plan. The lenders met for several hours on Monday but failed to agree on how to proceed.

Later the SBI released a statement saying the banks were trying to help Jet. “Co-operation by and support from all the other stakeholders will be the key to the success of the process,” it said.

The SBI-led consortium is trying to find a buyer for Jet, which was until recently India’s second-biggest airline by market share. A deadline passed on Friday for prospective bidders to express an interest in acquiring a 75% stake in the carrier.

Etihad Airways, which owns a 24% stake, has reportedly submitted an expression of interest to buy a controlling stake.

The Press Trust of India news agency reported on Tuesday that Jet founder Naresh Goyal had pulled out of bidding, deciding not to try to retake control of the airline that he ran until March.

The SBI was expected to announce a shortlist of prospective bidders later on Tuesday. They would then have until April 30 to submit formal bids.

A collapse of Jet would deal a blow to Prime Minister Narendra Modi’s pro-business reputation as he seeks a second term in ongoing national elections.