Nepal Air­lines seeks bailout

People's Review - - FRONT PAGE - By Our Re­porter

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.

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