Nepal Airlines Corporation (NAC) in on the lookout for a foreign strategic partner who will buy at least 51 percent of its shares.

NAC’s Managing Director Sugat Ratna Kansakar is currently holding informal stake sale talks with a Middle Eastern airline in Dubai. He has not provided any details.

“The government has mandated NAC to find a strategic partner,” Kansakar told Gulf News during a press conference in Dubai on Monday. He added that executives from a Middle Eastern airline had recently visited him in Kathmandu for ‘informal talks’ about purchasing shares in NAC. “The Nepal government could sell as much as 51 percent of the airline to Nepali or foreign investors and retain minority ownership,” he said. “A majority foreign ownership will not change the airline’s status as Nepal’s flag carrier.”

The Nepal government believes that an outside investor-led expansion will give the airline a greater share of passenger traffic, 90 percent of which is presently controlled by foreign airlines, Gulf News quoted Kansakar as saying. The Post’s repeated attempts to contact the NAC chief were unsuccessful. 

Finance Joint Secretary Hari Saran Pudasaini who looks after public enterprises said they had not received any formal proposal from the national flag carrier about selling its shares. “However, on different occasions, we have informed the Tourism Ministry to induct strategic partners,” he said.

Last September, 21 foreign firms including Lufthansa Consulting and Airbus submitted letters of intent (LoI) to provide world class management consultancy services to NAC. The national flag carrier had asked for LoIs to improve its overall system performance by inducting a management consultancy service provider in the first phase, and handing over management in the second phase.

As per NAC’s proposal, it plans to conduct a gap analysis to identify the airline’s shortcomings. The gap analysis period will last a month and NAC will have to pay a fee of 295,000 euros for the service. In the second phase, the company will take over NAC’s management. It will appoint its own people to top management posts like chief executive officer, chief financial officer and chief marketing officer. However, the plan fell apart after the Finance Ministry showed reluctance to fund the project. 

The government has been considering privatising NAC or bringing in a strategic partner for the last decade. In 2007, it initiated a plan to hand over NAC’s management to a foreign strategic partner so that it could reform and rescue the troubled carrier.

In July 1970, the then Royal Nepal Airlines Corporation (RNAC) had invited experts from Air France under a programme to improve management, and they handled most of the managerial positions until 1973. In 1972, RNAC acquired its first jet, a Boeing 727, in cooperation with the French carrier.

The state-owned carrier last year inducted two Airbus A320 jets and has been planning to induct two wide-body A330 jets, the first one by 2017. It has also decided to phase out one of its two Boeing 757s.

In 2015, NAC’s market share on international routes stood at 7.88 percent, up from 5.87 percent in 2014. Nepal Airlines saw the strongest passenger growth after it added two A320 aircraft to its fleet.

The much-maligned national flag carrier flew 253,658 travellers last year, up 22.87 percent compared to the previous year.