Nepal Airlines seeks bailout
Officials at the Nepal Airlines Corporation presented a bleak picture of the organisation by issuing a white paper last week. They said the NAC might face bankruptcy if the government does not provide capital to it. We have been dragged into financial stress so that t we have not been able to operate the newly acquired A330 aircraft to their full capacity- Madan Kharel, executive chairman of NAC, said while making the white paper public. The NAC that was on a mission to reclaim its long-lost glory said it was running out of cash and teetering on the edge of bankruptcy. Its “white paper” shows that the corporation's monthly cash deficit has reached Rs.317.79 million since inducting the first of two long-range Airbus A330s into its fleet about four months ago. Before that, Nepal Airlines had a monthly revenue surplus of Rs12.54 million. Airlines officials said the fast depleting cash flows are even more worrying. “We are facing severe financial stress and have requested the government to bail us out,” said Kharel. “We have been dragged into financial stress and we have not been able to operate the newly acquired A330s to their full capacity.” Kharel said although the situation may improve once the whole fleet goes in operation, the corporation desperately—and urgently—needs a bailout from the government. Nepal Airlines' debt-to-equity ratio, which measures the financial health of a company, has swelled to 39.82 percent from 14.40 percent over the last few months. According to the white paper, revenue earnings from the two wide-body jets from August 1 to September 15 stood at Rs.264.8 million, while the expenses nearly tripled to Rs.756.6 million, in addition to a staggering deficit of Rs.491.8 million. At the moment, the two A330 jets are being utilised for less than seven hours daily, less than half of the required flight time to generate a decent profit. The revelation about the
dire state of Nepal Airlines' finances comes on top of the corporation's massive loans to various institutions—its longand short-term loans stand at Rs.41.73 billion and it owes more than Rs. 3.66 billion in interest annually. The national flag carrier, instead of scoping pilots for the new aircraft, followed its traditional practice—to get the planes first and find the pilots to fly them later. It still has at least three planes sitting on the tarmac at the Tribhuvan International Airport while it frantically looks for capable pilots. Kharel admitted that the new planes were unable to fly to their optimum because of a shortage of flight crew.