India's Kingfisher Airlines said it had to cancel some flights due to "employee agitation on account of delayed salaries", pushing the debt-laden carrier deeper into trouble.
The airline said it was operating about 80 percent of its flights, implying that only 160 flights are being flown, compared with 400 six months ago.
Many of Kingfisher's pilots called in sick at various places around the country to protest against delayed salaries, local media reported.
Kingfisher Airlines, headed by drinks tycoon Vijay Mallya and named after his famous brand of Indian beer, has been struggling to continue its normal operations as a heavy debt load, higher jet fuel costs, stiff competition and low fares severely hurt its ability to raise funds.
It was suspended from settlement systems of the International Air Transport Association (IATA) last week, hurting the airline's ability to deal with global airlines and travel agents.
"The flight loads have reduced because of our limited distribution ability caused by the IATA suspension," Kingfisher said in a statement on Monday.
"This situation has arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are making all possible efforts to remedy this temporary situation," the airline said.
Kingfisher's bank accounts were frozen last month over outstanding dues. According to local media, Kingfisher was also issued a "show-cause" notice last week, asking it to explain why it had not paid about INR3 billion rupees (USDD$600.5 million) of tax.
Kingfisher, which has a debt of about USD$1.3 billion, needs at least USD$400 million soon to keep flying, according to the Centre for Asia Pacific Aviation, an industry consultancy.
Its lessors have started to cancel leases for planes, and the aircraft Kingfisher owns are mostly pledged with lenders.
An uncertain future and delayed salaries have also driven away about 300 pilots and a few hundred other staff to rivals in recent months.
Kingfisher shares have lost about 57 percent of their value since last April.