Reacting to the buzz, shares of the grounded-carrier tanked 4.86 per cent to Rs 2.74 -- its lower circuit limit on the BSE.
At the NSE, the stock plunged 3.5 per cent to Rs 2.75.
The airline, headed by liquor-baron Vijay Mallya, has not flown since October 2012, after employees went on strike demanding salaries.
The ailing carrier on February 12 reported a net loss of Rs 822.42 crore for the third quarter ended December 31.
The airline had reported a loss of Rs 755.17 crore a year earlier. With planes remaining on the ground, the airline had nil sales in the reporting quarter, similar to zero sales a year ago.
Kingfisher had never reported a profit since starting operations in 2005.
Besides non-payment of salaries, the private carrier is saddled with huge debt and losses. The airline has a debt of over Rs 7,200 crore towards lenders, mainly public sector banks since January 2011.