SINGAPORE/NEW DELHI (Reuters) - Crisis talks between India's cash-strapped Jet Airways Ltd JET.NS and aircraft lessors have failed to ease a row over late payments, prompting some lessors to explore taking back aircraft, three people familiar with the matter told Reuters.

A Jet Airways Boeing 737-800 passenger plane takes off from Sardar Vallabhbhai Patel International Airport in the western Indian city of Ahmedabad February 1, 2013. . REUTERS/Amit Dave

In what one of the people described as an ill-tempered showdown between the airline and some of the world's leading leasing firms, Jet's main lender State Bank of India SBI.NS sought to provide reassurance that India's biggest full-service carrier is doing all it can to pay its staff, suppliers and creditors.

“Jet has been delinquent for many months. Nobody wants to get in a situation where the problems worsen and it becomes even more difficult to take out aircraft,” one of the people said.

Jet controls over a sixth of a market experiencing an unprecedented boom in air travel. Yet high fuel taxes, a weak rupee and price competition have squeezed profitability, leaving Jet with 80.52 billion rupees ($1.14 billion) in net debt as at the end of September and defaulting on payments.

The airline had previously told some lessors it would clear arrears by Dec. 31, but was unable do so, the people close to the matter said.

(For an interactive graphic on India's aviation market, click tmsnrt.rs/2xlWaet)

At meetings on Tuesday, held at SBI’s headquarters in Mumbai’s business district, the bank’s Chairman Rajnish Kumar was asked how Jet planned to raise equity or debt, said one of the people - an attendee, who found the responses lacked sufficient detail.

Other attendees included Jet’s management team, including the airline’s founder and Chairman Naresh Goyal, as well as a senior adviser of Etihad Airways, which owns 24 percent of Jet and which did not provide any assurances, the person said.

An official from Punjab National Bank PNBK.NS later said lenders have "in-principle" agreed to extend some help to Jet, but details on the mechanics of it are still being worked out.

Some lessors have engaged with lawyers, are working with their technical teams about repossession and are monitoring the planes, but the situation could be complicated by a new bankruptcy law that allows up to 270 days where no action is permitted against the debtor or its assets, the person said.

Lessors such as GE Capital Aviation Services (GECAS) SMBC Aviation Capital and Jackson Square are looking into stopping the transfer of Boeing Co BA.N 737 MAX jets that had been due for delivery to Jet, the person said.

A second person said deliveries of 737 MAX jets from lessors had been behind schedule since November.

Avolon, DAE Aerospace, BOC Aviation Ltd 2558.HK and Aircastle Ltd AYR.N also attended the meetings along with GECAS and SMBC, one of the people said, declining to specify which are considering reclaiming planes.

Jet Airways, in a statement on Friday, said the airline is working on its turnaround strategy and updating its partners, in real time, on efforts taken to improve its liquidity.

“A comprehensive plan that will ensure business sustainability, preserve value, and enable the company to honor its obligations was outlined,” a Jet spokesman said in the statement, adding that the meeting took place in an atmosphere of cordiality and mutual appreciation.

The turnaround plan involves creating a competitive cost structure and restructuring the balance sheet, among other things, and is expected to “deliver a positive impact on the financials of the company,” he said.

SBI and SMBC Aviation did not immediately respond to requests for comment. DAE Aerospace, GECAS, Aircastle and Jackson Square did not respond outside of regular business hours. Etihad, BOC Aviation and Avolon declined to comment.

The people familiar with the talks were not authorized to speak publicly on the matter and so declined to be identified.

FINANCIAL HELP

Jet, controlled by Goyal, has turned to Etihad for financial help. However, the Abu Dhabi airline is not “in any position to sink new equity into Jet at this juncture,” said a person familiar with Etihad’s position.

Etihad posted a “significant loss” at the end of last year that would continue into 2019, according to an internal memo seen by sources on Thursday. The memo also showed 50 pilots would lose their jobs as the airline cut costs.

Jet held talks with Indian conglomerate Tata Sons Ltd [TATAS.UL] about financial aid last year. Sources told Reuters that Goyal ended the talks because Tata would have wanted him to step down or take a less prominent role.

A source close to Tata on Thursday said there had been no recent engagement with Jet and doing so was “extremely unlikely” because Tata people had “moved on internally”.

Tata Sons declined to comment on Friday.

REPOSSESSION

After the disorderly collapse of Kingfisher Airlines in 2012, India modified rules in line with the Cape Town convention, an international treaty making it easier for foreign owners to repossess aircraft when airlines default on payments.

Lessors can file a complaint with the government which has the power to cancel the registration of a plane within five working days and allow lessors to repossess it subject to certain conditions, including unpaid dues on the aircraft.

Some laws conflict with full implementation of the convention and the government in October said it was consulting to revise those laws - a move that could reduce lease rates for Indian carriers. Nevertheless, the ability to repossess a plane can be a more complicated process in India than in some other countries.

On Tuesday, Jet proposed to creditors that it would catch up with debt payments in arrears as of September, and from April meet debt payments as they come due, showed a document seen by Reuters.

Jet’s debt payments will be large over the next few years, starting with about 17 billion rupees due by March-end, credit-ratings firm ICRA said in a Jan. 2 research note.

($1 = 70.4000 Indian rupees)