Nepal Airlines demands Rs5 billion with Govt. for economy enhancement

Nepal Airlines Corporation (NAC) has demanded Rs 5 billion with government for capital enhancement. Sugat Ratna Kansakar, Managing Director for the corporation stated that according to the decision of the corporation’s Board of Director committee, NAC demanded about Rs 5 billion for capital enhancement.

Earlier, the agreement was made to ask for 20 billion rupees for capital enhancement. According to the consent of the board of directors, 20 billion rupees was demanded in the previous government. However, the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) had suggested the corporation to manipulate the amount. According to the Ministry’s suggestion, the corporation decided to request Rs 5 billion again and the letter sent to the Ministry.

Currently, the capital of NAC is only Rs. 370 million. However, NAC’s capital amounts to over 3.10 billion rupees after adding the cost of a MA60 and Y-12e aircraft granted by China. The government has suggested NAC to include the grant of Rs 2.13 billion for MA 60 and Rs 580 million for Y-12e aircraft to extend the capital.

Spokesperson of Ministry, Ghanshyam Upadhaya said “We have received a letter sent by the corporation asking for capital enhancement”. The discussion has started in the ministry, he added.
He also informed that it is important to extend the capital of NAC and the matter is positive if the ministry also has to pay.

However, Upadhaya says that the opinion should be taken from Ministry of Finance. He also said that the ministry will send the letter asking for the amount after a few days to the Ministry of Finance.

Mr.Kansakar said that NAC market expansion has plans to expedite the market vigorously. He said that due to low capital even the Loan interest payment of the organization has become uncomfortable.

The corporation does not have enough capital even to buy one aircraft. In this case, NAC cannot extend the service by adding aircraft.

The loan of the Corporation is more than Rs. 36.61 billion. Currently, NAC is spending income on paying interest. NAC has not yet operated the available aircraft which is inviting significant loss.

The main source of income of NAC is only Ground Handling. Mr. Kansakar stated that NAC’s capital can’t be expanded in such a situation; it will be difficult to pay a loan for a new aircraft purchase. NAC has already started preparing to buy for 6 Twin Otters for internal flights. The Board of Directors has approved for the procurement of two narrow body jet Airbus A320neo (new engine option) aircraft.

The corporation has a loan of 10 billion rupees taken from the financial fund of the financial year 2071/072 to purchase Airbus. The interest rate of this loan is 10.5 percent now. Similarly, NAC has loan of the amount of rupees worth Rs. 2.12 billion for paying the amount of interest in 1.75 percent interest rate by 6 years.

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