Money
FinMin to be guarantor on loan for fleet expansion
The Finance Ministry has agreed to act as a guarantor on a loan Nepal Airlines Corporation (NAC) plans to take to procure two widebody jets.Sangam Prasain
The Finance Ministry has agreed to act as a guarantor on a loan Nepal Airlines Corporation (NAC) plans to take to procure two widebody jets.
The decision to stand surety for the national flag carrier has allowed the Tourism Ministry to table a procurement proposal in the Cabinet.
NAC gave a presentation on its fleet and market expansion strategy in the presence of Finance Minister Krishna Bahadur Mahara on Sunday, convincing the Finance Ministry to act as a guarantor on a loan for the carrier’s Rs25-billion fleet expansion project, said NAC Managing Director Sugat Ratna Kansakar.
The current fiscal year’s budget statement has also promised to arrange funding to buy jets for NAC. It plans to request the Employees Provident Fund and Citizen Investment Trust for loans. NAC is scheduled to bring in the first jet by September 2017 and the second one by March 2018.
The corporation was expected to call a meeting of its board of directors last week to finalise the procurement of two Airbus A330-200 widebody jets, but the meeting had to be postponed after the Finance Ministry’s representative on the board retired. “The board is likely to meet this week or next week,” said Kansakar.
The management has tabled a proposal to buy two jets from the Airbus A330-200 family. The board may confirm or reverse the decision.
The NAC management had recommended switching to Airbus as pursuing a one-family aircraft strategy would reduce maintenance and crew training costs. NAC plans to have an all-Airbus fleet in the near future.
Currently, NAC flies five different types of aircraft—Boeing, Airbus, Twin Otter, MA60 and Y12e. Due to the diverse fleet, it needs to have different sets of pilots, engineers and spare parts for each type of aircraft.
Last January, the national flag carrier had unveiled an ambitious reform strategy that includes buying two widebody aircraft over the next two years.
The NAC board had agreed in principle to the corporation’s proposal to induct two long-range widebody Airbus aircraft into its fleet.
According to NAC, the proposed A330-200 can accommodate up to 280 passengers in a two-class layout. The carrier has proposed procuring long-range jets to serve destinations in North America, Japan, Australia and the UK as they have been identified as prospective markets for Nepal over the next 20 years.
NAC purchased two Airbus A320-200 aircraft last year by borrowing Rs10 billion from the Employees Provident Fund in its first fleet expansion in 27 years.
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 beleaguered national flag carrier flew 253,658 travellers last year, up 22.87 percent compared to the previous year. The carrier currently serves eight international destinations, including three Indian cities, and plans to expand to Guangzhou, China by this year.