Nepal Airlines to incur a loss of Rs 1.5 billion

Nepal Airlines Corporation (NAC) today told the Parliamentary Finance Committee that it could incur a loss of Rs1.5 billion in the current fiscal year, ending next week.
The national flag carrier’s losses on domestic operations amount to Rs 500 million, and losses on the international sector totals Rs 3.99 billion, informed NAC executive chairman Madan Kharel. “These losses overshadowed the net profit of Rs 3 billion the airline made from its ground handling operations at Tribhuvan International Airport (TIA),” he said, adding that the corporation had posted a profit of Rs 200 million in the last fiscal year.
Kharel attributed the losses to higher fuel prices and competition from budget airlines, which prompted low fares of the. “The corporation failed to pay another quarterly installment due in July due to a 'temporary liquidity crisis',” Kharel said, adding that it is the third time that NAC has defaulted on repayments to Citizen Investment Trust (CIT) and Employees Provident Fund (EPF), and its debts have piled up to Rs 1.13 billion. The national flag carrier has not paid two quarterly installments amounting to Rs 1.18 billion to the EPF and one quarterly installment of Rs730 million to the CIT.
The corporation has borrowed Rs 36 billion to the CIT and EPF, and it has to pay annual interest of Rs 3.66 billion to them but the state-owned airlines, which has been struggling to manage its cash flow since it inducted two brand new Airbus A330 jets into its fleet last year, has also failed to utilised the aircraft due to lack of proper plan, and routes. According to Kharel, operating the Airbus A330 jet is three times costlier than the Airbus A320. The corporation has two A320s.
Former Prime Minister Dr Baburam Bhattarai, on the occasion, said that the corporation is ill, and it needs a proper cure for the disease. He also suggested to privatise the company to turn it into a successful company.
Likewise, lawmaker Ghanshyam Bhusal said that Nepal Airlines is keeping its head above water with its income from ground handling.
Though, the tourism secretary Mohan Krishna Sapkota, on the occasion, said that the corporation needs restructuring.
The NAC has started knocking on the government's door asking for a bailout since 2017. In 2017, it asked for Rs 20 billion to raise its paid-up capital to support its financial restructuring plan.

Nepal Airlines to auction second Boeing

Nepal Airlines is publishing an auction notice for its last Boeing 757 – marking the the end of the five-decade long Boeing era in Nepal – on Friday after its board has approved ‘in principle’ the proposal to retire the age-old American aircraft.
The NAC has formed an expert committee to auction the Boeing. “The auction notice will be issued on Friday,” a source at the Nepal Airlines informed. “It’s a long process,” he said, adding that the NAC will have to give 45 days for potential buyers to submit their bids.
The NAC was planning to auction its last Boeing after the arrival of the Airbus A330s last year but was delayed after the allegations of financial irregularities in the purchase of the wide-body jets.
Nepal Airlines was initially planning to retire its last Boeing 757 after C-check – which will cost Rs 250 million – as it can significantly affect the aircraft’s resale value but changed the idea though the Gandaki was due for a C-check in February-end.
The national flag carrier also plans to auction off the Boeing’s spare parts as it will now have an all-Airbus fleet. The state carrier has set the minimum sale price at $7.8 million for the 31-year-old vintage Boeing ‘Gandaki’ with registration number 9N-ACB and its spare parts.
The narrow body twin-engine jet is valued at $5.4 million out of the total sale price by the NAC, which is technically bankrupt even after buying widebody Airbus. The NAC has not been able to pay its installment of loan to the Employment Provident (Fund) and asking the Finance Ministry to rescue it by paying the installment.
Nepal Airlines Corporation – the then Royal Nepal Airlines Corporation (RNAC) – entered the jet age in 1972 by acquiring a Boeing 727. The first Boeing 757 named Karnali and bearing registration number 9N-ACA, arrived in 1987. Gandaki – the narrow body twin-engine jet – was delivered the following year in 1988. The NAC has already sold its first 757 ‘Karnali’ to BB Airways of Bhaban Bhatta, for $1.46 million in December 2017.
Nepal Airlines has decided to sell off both the 757s as they were no longer profitable to fly due to their high maintenance costs compared to the revenue they bring in.
According to Nepal Airlines, the Boeing 757 burns 4 tonnes of fuel per hour, compared to 2.5 tonnes for the Airbus A320 aircraft. The NAC – in the move to phase out Boeing and adding Airbus fleet – currently possesses two 158-seater A320 jets delivered in 2015, and two 274-seater A330 jets delivered in 2018, in its international fleet.

NAC seeks aircraft on dry lease

Nepal Airlines Corporation (NAC) today announced a sealed tender notice for dry lease of two A320-200 aircraft to maintain its international fleet.

The last date to apply is fixed on June 26.

The corporation has asked for a sealed offer from airlines, manufacturer, and international leasing companies for dry lease of two A320-200 aircraft with IAE V2527E-A5 engine for a period of five years beginning from October 26.
The offered aircraft should be preferably in two or one configuration of economy and business class, according to its notice of the ailing airlines that required the aircraft to operate scheduled flights from Kathmandu.

In dry lease an aircraft is leased without crew and the NAC will hire the flight crew and have operational control of the aircraft as it has its own crew.

International airlines add flights to Kathmandu

Increased demand has forced Gulf Air to add more flights to Kathmandu.
Last week, Qatar Airways has also announced the addition of flights to Kathmandu from October 1, due to increased demand.
Gulf Air — Bahrain’s national carrier — as part of its new winter schedule beginning November 1, is increasing its flights to Kathmandu from 12 to 14 per week. According to new schedule it will have two flights daily for more convenient onward connectivity through Bahrain’s efficient hub to Europe and the GCC.
Similarly, Qatar Airways has also increased its flights frequency on Doha-Kathmandu route from October 1. According to the airlines, from next month the airlines will operate four flights a day between Doha and Kathmandu. “It will give a wider choice to passenger from Nepal to travel their final destinations in Europe, North America, South America, Africa and Arabian Gulf countries,” Qatar Airway’s country manager for Nepal Ramdas Shivram, said, adding that the airlines has also brought a very exiting value for money offers to passengers. The offer will be valid for a limited time period, said the Qatar Airways that has bagged World’s Best Airline 2011 award in June is growing on an average of 35 per cent annually.
“Gulf Air’s Kathmandu flight has been increased to 14 flights per week to meet increasing commercial demand on the route,” Gulf Air commercial manager for Nepal Renji Thomas said, adding that it has carried more than 82,000 passengers to and from Kathmandu at a consistent 80 per cent seat load factor. But the airlines is hopeful of an increase in demand in future.
Gulf will initially operate an Airbus A320 to Nepal replacing it with a larger A330 during the peak season.