Shares in Kingfisher Airlines drop 4.6 percent ahead of a deadline of October 20 to respond to the civil aviation authorities on why its license should not be cancelled.
The Directorate General of Civil Aviation told the airline on October 5 to demonstrate why its permit to fly should not be suspended or cancelled for failing to establish a "safe, efficient and reliable service", and gave it 15 days to reply.
Kingfisher had previously grounded flights until October 20, but the industry regulator on Wednesday rejected Kingfisher's winter schedule, prompting expectations flights will continue to be grounded past the October 20 deadline.
As of Thursday's close, Kingfisher shares have dropped 29.5 percent since bankers were unable to agree on the airline's turnaround plan on September 27.
Kingfisher is reeling from $1.4 billion of debt.
Vijay Mallya, who controls Kingfisher via his UB Group, is in talks with Diageo Plc to sell a stake in United Spirits.
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