Jet Airways shares drop as crisis deepens

Shares of Jet Airways Ltd dropped about 7 per cent on Wednesday as the company's distress aggravated after the Indian government called for an emergency meeting to discuss the cash-strapped carrier's woes.

The government has asked state-run banks to rescue the airline without pushing it into bankruptcy, two people within the administration told Reuters.

State-run banks have been urged to convert debt into equity and take a stake in Jet in a rare move in India to use taxpayer money to save a struggling private-sector company from bankruptcy. The two people and another source, however, said this would be "transitory" and lenders could sell the stakes once Jet revives itself.

The 25-year-old airline defaulted on loans after racking up over USD 1 billion in debt, and owes money to banks, suppliers, pilots and lessors - some of whom have started terminating their lease deals with the carrier.

Jet now operates only 41 aircraft, aviation regulator Directorate General of Civil Aviation has said. Several passengers have been affected due to the grounding of Jet flights.

Mounting troubles dented the stock, with shares falling as much as 6.9 per cent to 213.35 rupees, in their biggest daily percentage fall in over a month.