Passengers on flight from Paris to Bogotá say they thought they were going to die as burning smell filled cabin

Passengers on an Air France flight travelling from Paris to Bogotá have spoken of how they thought they were going to die when the plane they were on plummeted towards the Atlantic ocean after a burning smell filled the cabin.

Euclides and Rosa Montes, Colombians with British nationality travelling from London to Bogotá via Paris, told the Guardian that people on board were "saying their goodbyes to one another" as the plane – an Airbus A340-300 – rapidly descended to within 2,000 feet of the sea to offload fuel.

"We looked out of the window and the sea was directly below us," said Euclides. "Fuel was pouring out over the wings. We thought we were going to die."

Another passenger on the plane, Eden Victoria Erlandsson, told the Swedish newspaper Expressen, that "panic took over, the cabin crew were sweating and shouting, and people were crying and praying. It was total panic."

Air France told the Guardian the atmosphere was "tense" after an alarm went off in the crew rest area, but said the reports of smoke in the cabin and panic were "false" and a "gross exaggeration".

The flight, which was carrying hundreds of passengers, made an emergency landing on the Azores island of Terceira at about 1.30pm on Monday afternoon.

After landing on a runway at Lajes airport on the tiny island, passengers claimed they were evacuated via emergency slides amid general chaos. Fire brigades and ambulances were scrambled to the scene.

At least 50 of the Colombian nationals on board were reportedly refused permission to enter the Azores as they do not hold the required Shengen visa documentation. However, Air France said all passengers were transferred to hotels.

After the incident some passengers questioned whether the flight should have taken off, after its departure was delayed for 34 minutes due to unspecified technical problems at Charles de Gaulle airport. Passengers claimed when flight AF422 finally took off from Charles de Gaulle at 11.24am the smell of burning was already apparent.

Two hours into the flight the plane rapidly diverted, turning back to the nearest landing point available, after the alarm went off.

However, Air France contested the version of events given by passengers. "There was no smoke on board and no use of the emergency slides," said Air France spokeswoman Marina Tymen.

"After the fire alarm went off the masks came down and the plane was diverted. Another plane and crew were despatched to take the passengers on to Bogotá. This was all perfectly normal standard procedure according to the rules that apply not just to Air France but to any airline, even though it was a false alarm."

"I can say categorically: there was no smoke, there was no fire and the emergency slides were not deployed," she said.

• This article was amended on Tuesday 6 March to include a response from Air France