Struggling to keep it afloat in the wake of a dismal financial performance in the last three quarters, Jet Airways is withdrawing its flight services on as many as seven Gulf routes from this month, a source said.

NEW DELHI: Jet Airways creditor State Bank of India is likely to own 15% of the airline if the cash-strapped carrier’s plan for a debt-for-equity swap is approved, according to Indian TV channels.

With debts of about $1.14bn, Jet has been hit by fierce competition from other low-cost carriers, a rupee depreciation and high oil prices.

It owes money to banks, pilots, vendors and lessors, some of whom are considering taking back aircraft, sources have told Reuters.

Struggling to keep it afloat in the wake of a dismal financial performance in the last three quarters, Jet Airways is withdrawing its flight services on as many as seven Gulf routes from this month, a source said.

The Naresh Goyal-controlled airline will not operate as many as 39 services per week to Doha, Muscat, Abu Dhabi and Dubai from various domestic cities.

Jet said it would seek shareholder approval next month to convert debt into equity, increase its share capital and allow lenders to nominate a director on its board to help resolve its financial problems.

Its lenders, including SBI, could end up owning as much as 30% while shareholder Etihad Airways could see its stake rise to more than 40% from 24% if it injects more equity in the Indian carrier, TV channels reported.

The airline’s founder and chairman Naresh Goyal is likely to see his stake cut to below 20% from 51%.

Jet, which controls a sixth of India’s booming aviation market, did not respond to a request comment, while SBI and Etihad also did not reply to e-mails seeking a response.

Indian banks in 2010 undertook a similar debt for equity swap to try and save Kingfisher Airlines, founded by liquor baron Vijay Mallya, and ended up owning nearly a quarter of the airline, before losing out when it was eventually grounded.

Jet defaulted on a debt payment to a consortium of Indian banks, lead by SBI, this month, prompting a downgrade by ratings agency ICRA.

The airline has to make large debt repayments over the next few years, starting with about Rs17bn ($242mn) by the end of March, ICRA said on January 2.

The Economic Times reported yesterday that Jet’s lenders want to repossess some planes and have forced the airline to ground five aircraft, including its new fuel-efficient Boeing 737 MAX planes, leading to flight cancellations.

Jet was scheduled to add 11 737 MAX planes to its fleet by March 31, but has taken delivery of only five and will not add more until a resolution plan is agreed, Reuters has reported.