Even as the government clarified that there was no move to propose a bailout package for Kingfisher Airlines, official sources said the crisis-ridden carrier was free to approach the Ministries concerned on issues concerning soft loans and for restoration of credit line from oil companies for jet fuel supply.

Kingfisher CEO Sanjay Aggarwal said the airline did not make any request for bailout to the government, but admitted to having asked banks for an increase in limits because of the significant increase in the operating costs caused by the fuel price hike and the rupee devaluation.

Senior officials of Kingfisher held discussions with their legal and financial advisers, even as its lenders began deliberations to consider whether the airline's debt could be restructured. Overall, banks, including SBI, ICICI Bank, IDBI Bank and Punjab National Bank, have an exposure of Rs.7,700 crore to the airline.

Kingfisher also sent an email to its frequent flyers, explaining the reasons for mass cancellation of flights.

“We have decided to focus on the full-service market; to this end, Kingfisher Airlines has initiated reconfiguration of its aircraft. This exercise will require a few of our aircraft to be out of service for the next few weeks,” said the email sent by Anshu Sarin, vice-president, guest loyalty. “In line with maximising productivity, we have rationalised our network, resulting in a temporary discontinuation of approximately 50 flights out of our current operating schedule of approximately 350 departures a day. Once the reconfiguration is complete, these aircraft will be pressed back into service immediately.” the email sent by Anshu Sarin, vice-president, guest loyalty, said.

Meanwhile, the Directorate-General of Civil Aviation has asked the carrier to give details of its plan for reconfiguration of its fleet to prevent large-scale flight disruption, as it found that Kingfisher was not operating flights as per the approved winter schedule.

DGCA chief E.K. Bharat Bhushan also warned that if the airline was found not operating the slots allotted to it, they would be given to others willing to operate, “regardless of who it is.”