India is mulling options to save jobs at Jet Airways India Ltd. including asking low-cost carrier SpiceJet Ltd. to consider taking over some of the debt-laden company’s aircraft, people with knowledge of the matter said.

The proposal involves SpiceJet, led by Chairman Ajay Singh, acquiring as many as 40 of Jet Airways’ grounded planes that are owned by lessors, one of the people said, asking not to be identified as discussions are preliminary. The government has also reached out to other carriers, the person said.

Prime Minister Narendra Modi is keen to avoid the collapse of an airline that employs about 23,000 people, weeks before elections. The need to save jobs at the beleaguered carrier became urgent this week after lenders led by State Bank of India failed to convince Etihad Airways PJSC, which owns 24 percent of Jet Airways, to infuse funds into the Indian carrier.

Jet Airways has amassed about $1.1 billion of debt and has fallen behind on paying loans and salaries. Once India’s second-biggest airline it has been forced to ground almost two-third of its fleet because its inability to pay lessors. Earlier today an Indian government official said they were trying to revive Jet Airways by changing its management but any decision on the carrier’s future will be a commercial decision by the lenders.

Both SpiceJet and Jet Airways operate Boeing Co.’s 737 planes making it feasible for the budget carrier to fly the aircraft. SpiceJet, which had cash of about $15 million as of Sept. 30, will initially operate a two-class configuration of business and economy under the SpiceJet brand, one of the people said. Lessors have been in discussion with SpiceJet to takeover the planes, the person said.

Operating 40 aircraft will help employ as many as 250 pilots as well as cabin crew, maintenance workers and engineers, the person said.

A representative for SpiceJet didn’t respond to an email, while a spokesman at Modi’s office declined to comment.

Singh, who is credited with turning around SpiceJet from the verge of closure in 2015, and rivals including IndiGo are potential beneficiaries of Jet grounding most of its fleet. SpiceJet surged 16.4 percent, its biggest gain in 10 months, in Mumbai on Wednesday, while InterGlobe Aviation Ltd., which runs IndiGo, jumped 7.3 percent.

Lenders to the carrier will make every effort to keep the ailing carrier in operation, State Bank of India Chairman Rajnish Kumar said in New Delhi on Wednesday after meeting Finance Minister Arun Jaitley.

“Our aim that corporate debtor which is Jet Airways should not be harmed, we are not concerned with who the promoter is,” he told reporters.

Lenders are seeking Jet Airways Chairman Naresh Goyal’s resignation and want him to reduce his stake to below 10 percent, a person familiar with the matter said. Banks will infuse 15 billion rupees as emergency fund to keep the airline afloat once Goyal resigns, the person said, asking not to be identified because the talks are not public.

Singh partnered with firms including a unit of JPMorgan Chase & Co. in 2015 to rescue SpiceJet, which he had co-founded.

–With assistance from P R Sanjai.

©2019 Bloomberg L.P.

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Photo Credit: SpiceJet may fly as many as 40 jets that had been operated by Jet Airways. They are owned by lessors. Andrew W. Sieber