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Kingfisher Airlines is downsizing. Over the next few months, the airline may cut its fleet from the existing 64 planes as it struggles to stay afloat.

Kingfisher runs a mix of Airbus A320, Airbus A330 and ATR type planes and 90 per cent of them are on lease. The lease terms of about 20 Airbus A320 planes are due for renewal in the next three-four months.

Some of the Airbus and ATR lessors are now trying to repossess their planes, as some of the grounded aircraft have been stripped of components to keep other planes flying. In November, leasing company AerCap took back two leased planes from the airline.

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"Kingfisher is seeking 15-30 per cent discount in lease rentals. It has also asked the lessors to release security deposits amounting to $200 million.

The lessors are unlikely to accept all the requests and eventually its fleet size will shrink if the leases don't get renewed," an airline insider said.

The airline says it will use the money parked with lessors to repay its debt. The airline posted losses of over Rs 700 crore (Rs 7 billion) in the first half of financial year 2011-12 and has debt in excess of Rs 6,000 crore (Rs 60 billion).

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"We have begun returning leased planes. The management is also in dialogue with other companies to take on lease one or two planes but it all depends on the availability of funds," sources in the airline said.

The airline spokesperson did not respond to an email and SMS sent on Friday, seeking comments on the issue. Last week, the directorate general of civil aviation expressed concern as one-third of Kingfisher Airlines' fleet is grounded.

The regulator has given the airline time till today (Monday) to provide a specific timeline for getting the grounded aircraft back in the air.

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At least two banks, State Bank of India and Bank of India, have classified loans to Kingfisher Airlines as non-performing assets.

Kapil Kaul of the Centre for Asia Pacific Aviation said he expected Kingfisher to downsize operations further in the near term.

"The immediate concern for the airline is fund-raising and if it gets delayed, it will be more difficult to recover. "The airline will have to look at a combination of promoter equity and get a financial investor immediately," he said.

Kaul said support from banks looked difficult and getting a strategic foreign investor would take time even if it received government approval. In October, Capa had estimated the airline's funding requirement at $400 million.