Kingfisher Airlines Ltd plans to return some aircraft voluntarily to leasers after defaulting on payments and has seen a fresh exodus of pilots, local media reported.
Kingfisher shares plunged as much as nearly 20 percent on Tuesday ahead of a meeting between the airline's top executives and the country's aviation regulator.
The Directorate General of Civil Aviation has asked the struggling carrier to explain why it has cancelled a large number of flights since Saturday.
Kingfisher will return two more Airbus A320s this month to their leasers, as their leases have been terminated because of payment defaults, the Mint newspaper reported on Tuesday, citing a government official who declined to be named.
Of the 64 planes in its fleet, Kingfisher is using just over a dozen to operate flights currently, the newspaper said.
A Kingfisher Airlines spokesman did not respond to calls by Reuters for comment.
The Times of India newspaper said that 35 of Kingfisher's A320 commanders quit the airline on February 14, followed by another over the weekend. In all, about 300-350 pilots have quit the airline in the last six months, it said, without citing any sources.
Kingfisher, controlled by liquor baron Vijay Mallya, has cancelled 32 out of the 240 flights that it operates each day, the airlines said on Saturday, adding that it expected to return to full service within days.
The carrier, which will submit details on the cancelled flights to the DGCA on Tuesday, said on Monday it was forced to cancel flights because tax authorities had frozen its bank accounts, hurting its ability to make operational payments.
Banks own about a quarter of cash-strapped Kingfisher, which has so far been unable to attract fresh equity amid growing worries about its future.
Kingfisher, named after the country's most famous beer, lost 4.4 billion rupees in the fiscal third quarter that ended in December.
Indian airline companies, on course to lose $3 billion for the year ending in March, have struggled with low fares, high jet fuel prices and fierce competition. Five out of six major carriers in India are losing money.