Cash-strapped Jet Airways has disclosed its board’s approval of a bailout plan put forward by a consortium of lenders led by the State Bank of India (SBI).

Under the proposal, Jet would receive gap funding of Rs85 billion ($1.28 billion), including the repayment of Rs17 billion of aircraft debt.

The funds would be generated by a mix of equity infusion, debt restructuring, and sales, sale-and-leasebacks and refinancing of aircraft.

Jet says the bailout plan will be presented to its 24% shareholder Etihad Airways, as well as owner Naresh Goyal.

The carrier will also look to receive the approval of shareholders at an extraordinary general meeting on 21 February to discuss a proposed share issue, which includes the option for key lenders to swap debt for equity in the airline.

The plan allows for key lenders to covert their debt into 114 million shares worth Rs10 each, generating Rs1.14 billion in equity. This would result in the lenders becoming the largest shareholders in the company, says Jet, signalling that Goyal will have to reduce his 51% share in the airline.

Loss-making Jet has been seeking fresh capital after a torrid 2018, amid major challenges in the Indian airline sector. News of a delay in payment of loan installments and interest prompted credit agency ICRA to downgrade its long-term rating on Jet for a fourth time since September.