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Wednesday, May 15, 2019

NAC’s profit surges after grounding of Jet Airways

Kathmandu, May 15

The financial troubles that forced Jet Airlines to ground its planes provided a windfall for Nepal Airlines Corporation (NAC).

As NAC increased the number of daily flights to India, it has currently been making a profit of around 40 per cent in each flight, which is reported to be fully booked these days. Moreover, the corporation’s wide-body aircraft has been clocking in 10 to 11 hours of flight time per day now compared to just seven hours before the Jet Airways fiasco.

However, one NAC official said that the recent profit is hardly enough to offset the losses incurred by the national flag carrier.

This is because the corporation is yet to clear the loan and interest on the wide-body aircraft.

The national flag carrier had purchased the wide-body aircraft by borrowing Rs 24 billion at 10 per cent interest from the Employees Provident Fund (EPF) and Citizen Investment Trust (CIT). As per the loan agreement, NAC has to pay back the loan in 60 instalments to clear the debt of EPF and CIT.

According to Navaraj Koirala, joint spokesperson for NAC, the corporation has to pay around Rs 804 million per instalment.

Till date, the national flag carrier has cleared first instalment and only Rs 100 million of the second instalment. Moreover, it has already declared that due to cash flow problem, it is unable to pay back the loan at the moment.

“As we can’t pay back the loan on our own, we’ve sought financial support from Ministry of Culture, Tourism and Civil Aviation,” he said. “A high-level discussion is under way regarding the matter.”

As per the corporation, it still needs to pay a total of Rs 35 billion, including loan interest. Prior to this, NAC had asked for financial help with the government by issuing a white paper in November, 2018. During that time, NAC had asked for Rs 20 billion with the government, of which it had received the pledge for Rs two billion.

However, NAC has not received the amount yet.

from Business – The Himalayan Times http://bit.ly/2Ebetny

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