Money

NAC seals $209.6m deal for two Airbus planes

  • Aircraft will be delivered by Q2 of 2018, instead of Q1 deadline stipulated earlier
- SANGAM PRASAIN, KATHMANDU

Apr 8, 2017-The decade-old plan of Nepal Airlines Corporation (NAC) to acquire wide-body aircraft to expand its network beyond Asia came closer to fruition on Friday with the signing of the final purchase agreement for two Airbus A330-200 long-range jets from US-based AAR Corp.

The $209.6-million contract for two A330-200 marks the largest-ever jet purchase deal in Nepal’s aviation history.

The agreement was signed between NAC Managing Director Sugat Ratna Kansakar and Deepak Sharma, president of the International Supply Chain at AAR Corp. Friday’s sales and purchases agreement turned the national flag carrier’s two-decade-old dream of adding wide-body jets to its fleet into a reality. NAC has been attempting to fly the A330 since 1997. The two jets are expected to arrive in Nepal by the second quarter of 2018.

“It’s a historic deal,” said Kansakar after signing the agreement. He said both the parties have agreed that the final delivery price of the aircraft would not exceed $109 million each after adjusting inflation.

According to Kansakar, Nepal has been known as an expensive destination due to high airfares. “We expect the airfare to come down to some extent once NAC adds wide body jets to its fleet.”

The A330 jets ordered by NAC can accommodate up to 280 passengers in a two-class layout. As per the agreement, NAC will release 35 percent of the total aircraft cost as pre-delivery order fee within 28 days of signing the contract. The remaining amount should be paid after delivery of every aircraft.

However, the aircraft delivery date has been pushed back slightly due to delay in sending the commitment fee and signing the sales and purchase agreement, officials said.

As per the agreement, AAR Corp would supply aircraft by second quarter of 2018, instead of first quarter deadline stipulated earlier. Initially, the supplier had pledged to provide the first aircraft by September 2017.  The national flag carrier has already transferred $1 million as ‘commitment fee’ to AAR Corp.

The two aircraft that NAC is planning to buy are owned by HI Fly, an airline based in Lisbon, Portugal. Friday’s agreement has established NAC’s right over the property.

The state-owned airline plans to phase out its ageing Boeing 757s and plans to operate all-Airbus aircraft fleet in the near future. The national flag carrier plans to connect Kathmandu with Seoul in South Korea, Tokyo in Japan, Dammam in Saudi Arabia and Sydney in Australia once it adds wide-body aircraft. It has also announced plans to increase flight frequencies to key destinations like Kuala Lumpur, Hong Kong and Doha.

A notice inviting proposals from aircraft manufacturers, airlines, aircraft leasing companies and bankers for two Airbus A330-200 aircraft was issued on September 26, 2016.

The supplier is required to include the cost of a minimum set of flight and maintenance crews for the duration of at least one year. It also has to include the cost of consumable spares and tools required for day-to-day line maintenance up to the ‘A’ check level for a year.

Published: 08-04-2017 07:42

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