By P R Sanjai and Saloni ShuklaJet Airways India Ltd.

has missed a payment to Indian lenders as country’s second largest airline by passengers struggles to raise funds after losses worsened a cash crunch. The missed payment prompted a downgrade on ratings of its loans and bonds by credit assessor ICRA to D, a score that signifies that borrowers are in default or are expected to be soon. The beleaguered carrier said in an exchange filing that payment of interest and principal installment due on Dec.

31 to a consortium of Indian banks led by State Bank of India "has been delayed due to temporary cashflow mismatch" and that company "has engaged with them in relation to same." The filing didn’t specify amount due and didn’t provide further details. Crushing fare wars are a hallmark of India’s intensely competitive aviation market, and Mumbai-based Jet Airways hasn’t seen a profit in nine of past 11 fiscal years.

The company reported its third straight quarterly loss in November with surging liabilities that signaled a deepening of financial distress.

A weakening rupee also added to its woes.

It has fallen behind on payments to staff and lessors. Jet Airways has been talking to its foreign equity partner Etihad Airways PJSC and a clutch of financial investors to avoid potential defaults to lenders and lessors, people familiar with matter said.

It has also sought a short-term loan of 15 billion rupees ($216 million) from State Bank of India for working capital and bank is currently conducting a forensic audit for possible approval of such a facility, according to people. The company didn’t have any immediate comment when contacted Wednesday. In last couple months, Jet Airways founder and chairman Naresh Goyal, along with Etihad Airways chief executive officer Tony Douglas, met Rajnish Kumar, chairman of India’s largest lender, State Bank of India, multiple times at its Mumbai headquarters to explore a resolution mechanism. “Jet Airways continues to have negative networth due to accumulated losses and diminution in value of its investments in its subsidiary Jet Lite (India) Ltd.,” ICRA said in its statement.

“Furthermore, liquidity strain has aggravated due to delays by company in implementation of its liquidity initiatives.”