Nepal Airlines Corporation (NAC) has initiated the search for new loans with subsidized interest rates to acquire new aircraft and settle the debt of the currently operational fleet. In a public announcement, the national flag carrier requested a loan amount of Rs 135 billion from both domestic and foreign institutions. The allocation includes Rs 55 billion to repay the existing debt on the current aircraft, Rs 75 billion for the acquisition of new aircraft, and Rs 5 billion for constructing its hangar. NAC aims to secure loans at more favorable rates from domestic and foreign organizations, intending to repay loans obtained from the Employees Provident Fund (EPF) and Citizen Investment Trust (CIT). The outstanding debt from the purchase of 4 aircraft for international flights, along with the debt from Chinese aircraft acquired by the government, is also part of this initiative. While obtaining loans at subsidized rates is a step in the right direction, NAC must earnestly address internal issues to develop a sustainable long-term business plan, making its operations commercially viable.
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NAC officials emphasize their strategic approach of securing new loans and repaying existing ones at lower interest rates, compared to the current 10 percent per annum. This decision stems from the challenge NAC faces in managing high-interest loans, hindering its operations. According to the NAC's 10-year plan, the sought-after loan is specifically for the immediate purchase of three new aircraft for international flights. Acknowledging the limitations in reaching profitable destinations due to the insufficient number of aircraft for international flight expansion, NAC has set the condition that Rs 25 billion of the loans sought from domestic and foreign organizations will maintain an unchanged interest rate. The interest rate and foreign exchange rate for these loans will be determined through mutual agreement between NAC and the lenders, with government approval. As part of its fleet expansion strategy, NAC plans to immediately lease two Airbus aircraft, pending approval from its board of directors. Additionally, it is acquiring new aircraft for three domestic flights.
While the efforts of NAC to secure loans at subsidized rates and expand its existing fleet both in the domestic and international sectors are positive, we as a newspaper urge it to adopt a multifaceted approach to improve its financial health. Conducting a comprehensive financial audit to identify and address inefficiencies, cost overruns, and financial leakage is crucial in this regard. While the plan to increase the aircraft in the fleet is a positive decision, NAC must enhance customer service and marketing strategies to attract more passengers and boost revenue. Collaborating with international airlines for code-sharing agreements or alliances can enhance NAC's global reach and overall competitiveness. It is also equally important to invest in employee training and foster a culture of efficiency and accountability for NAC's long-term financial sustainability. A dynamic strategy addressing operational, marketing, and structural aspects is vital for revitalizing NAC's financial health.
