Kingfisher, one of India's largest airlines, has grounded 15 of its aircraft as the group's head, the flamboyant tycoon Vijay Mallya, enters last-ditch talks with lenders to put together a rescue package.
Mr Mallya has been in crisis talks to keep the airline flying and is reportedly seeking additional capital from a consortium of banks led by State Bank of India (SBI).
Pratip Choudhuri, the chairman of SBI, was quoted by news wires as saying that "everything is on the table".
Kingfisher reportedly grounded 15 aircraft after running out of money to keep operating them. The news came as no surprise on the trading floors of Mumbai, and many market watchers fear the worst for the group.
"The company's long-term future has been uncertain for a while. The market has already priced the stock as bankrupt and this is why the stock is gaining.
"To be honest, the fact that they have grounded some of their fleet is no news to anyone," said Vinit Pagaria, a vice president of investment strategies at Microsec Capital.
Kingfisher's share price has lost more than 67 per cent of its value so far this year, and its auditors said in September that it needed a large cash infusion to survive.
Kingfisher has struggled to raise fresh funds, and this latest setback comes just weeks after it announced dozens of route cancellations and losses of 4.69 billion rupees (Dh326 million) in the second quarter this year. The group has about $1.2bn (Dh4.4bn) of debt.
Since the company's downfall began some months ago, the Bombay stock market has been rife with rumours of a possible buyer for the company.
Tata and Reliance, two local multi-industry giants, as well as the construction group Sahara have been mentioned as possible suitors but all have issued denials.
There is little hope Kingfisher will find a buyer.
"The only way out is if the company gets bought out by a local or foreign investor. But I am not too optimistic about that either, given the size of the company's debts," said Sharan Lillaney, an analyst at Angel Broking.
While Kingfisher may be struggling to fly, the overall sector view gives little cheer. Vijay Nara, an aviation analyst at Mumbai's Fortune Equity Brokers, said the situation was grave for Indian airlines.
"The competition is tough, the margins are close to zero and they have massive debts," he said.
Few investors would seriously consider making a move to rescue these battered airlines, he said. "I don't see any M&A [mergers and acquisitions] moves happening. Especially if the price of crude remains high, their problems will continue," he said. Kingfisher started its business as a full-service carrier only in 2005 and was listed when it bought out the budget carrier Air Deccan in 2008. But it has never made a profit.
The airline's attempt to raise $250m to $350m through an issue of global depositary receipts in January was not successful. It also tried to attract private-equity investment in 2008 and 2009, but did not secure a deal.
The company said in September it was shutting down its budget business to focus on the premium model.
Recent reports say Kingfisher has sought government help for a bailout and a proposal has been submitted to lenders.
Kingfisher reported a doubling in losses between July and September to 4.69bn rupees compared with losses of Dh2.31bn for the same period last year.