MIAMI – Established in 1958, Nepal Airlines (RA) seems to be positioned in a state of doubt in regards to its future operations.
The airline faces two choices as per the given current situation, which entails privatization or a complete halt of operations. Alas, as with any airline, it is poised to fail amid the pandemic without any backing.
For FY 20-21, The flag carrier reported a loss of Nepali Rs5bn (US$4.2m) as most flights were brought to a standstill. A 73% drop in domestic passengers and a 86% drop in international passengers. The airline has been underperforming in finances ever since its establishment, the current debt stands at Rs47bn, and yet, several political bodies in the country want to keep the carrier flying.
Another reason for a massive debt was due to the airlines purchasing of four brand new Airbus aircraft (two Airbus A320-200 and two Airbus A330-200) and six Harbin Y-12 Chinese turboprops.
The government yet manages to pay off all the airlines’ loans and outstanding. The airline has received multiple bailouts adding to the sum of Rs31bn over the years.
“Currently NAC is a costly white elephant. The practice of the government always having to rescue public sector companies is wrong.” States an expert in development and infrastructure policy.
NAC did attempt to reach out for strategic partnerships sometime ago, only Lufthansa got back to which the response from the Nepali side was delayed, and eventually, the potential chance went waste.
At the moment, the national carrier can either be privatized for which it’ll need to overcome many hurdles in bureaucracy or the airline ceases operations as the financial background, the pandemic, and the overall management of the airline has left the airline in the middle of nowhere.
Featured image: Nepal Airlines