Jet Airways India Ltd. is set to get a lifeline after its lenders proposed a bailout plan, potentially paving the way for a revival of the carrier that was on the verge of collapse.

The Mumbai-based carrier, which needs 85 billion rupees ($1.2 billion) to help it get back on its feet, will be revamped, with banks becoming the biggest shareholders of the company, according to a filing Thursday. The restructuring would involve a mix of debt-to-equity swap, new capital infusion and asset sales, the company said, without elaborating.

The proposal, reached after weeks of negotiations, may provide a respite to the struggling carrier, which still faces intense competition from low-cost rivals, high fuel prices and local levies—same conditions that brought it to its knees earlier. Jet Airways, one of the first private Indian airlines to dominate the local market after the government ended state monopoly, has accumulated more losses than any publicly traded Asian carrier apart from Pakistan International Airlines Corp.

The proposed bailout plan needs approvals from lenders, a banking industry group, founder Naresh Goyal and the board of Etihad Airways PJSC, which owns 24 percent of the carrier, according to the statement. Jet Airways has called for an extraordinary general meeting on Feb. 21 to seek shareholders’ consent to name lenders’ nominees to the board.

Banks will own 114 million shares of Jet Airways after the restructuring. Thursday’s statement didn’t say how much Goyal and Etihad would hold. The founder-chairman currently owns 51 percent.

The rescue package is reminiscent of a similar bailout for Kingfisher Airlines in 2011, when lenders including SBI converted existing debt into the loss-making company’s shares. But the carrier shut down three years later.

Although banks, with their newly acquired stake in Jet Airways and representation on the board, will have more say in its operations, the Kingfisher episode underscores the perils posed by this move. Lenders in India have already been under pressure from regulators to clean up about $120 billion of soured debt.