Nepal Airlines selling off its planes at 'junkyard price'

Kathmandu: Nepal Airlines is selling off its Chinese planes at 'junkyard price', The Kathmandu Post reported.

The six aircraft acquired between 2014 and 2018, were worth Rs 6.66 billion in grants and loans. One of the planes has since crashed. The national flag carrier is asking Rs 220 million for the remaining five aircraft in an apparent effort to get rid of them as fast as possible.

Nepal Airlines officials say the grounded planes--two 56-seater MA60 and three 17-seater Y12e--have been more trouble than they are worth.

Plagued by breakdowns and lack of pilots, operating the aircraft was a massive financial strain, pushing the debt-ridden company into greater distress. In July 2020, the state-owned carrier felt it had had enough, and put all of them in deep storage.

As per The Kathmandu Post, the current asking price of Rs 220 million was determined by an independent international assessor, according to a highly-placed source at Nepal Airlines Corporation.

The official said: "That is scrap value."

Nepal Airlines on January 19 issued a request for proposals (RFP) for a full appraisal of the two MA60 and three Y12e aircraft. The company had decided to sell the planes and spare parts as there were no takers for a lease offer despite a deadline extension.

Among the four short-listed assessors--Aviation Asset Management Inc, Fintech Aviation Services Sarl, IBA Group Limited and Ishka Ltd--American company Aviation Asset Management Inc was selected.

Nepal Airlines paid the company around USD 20,000 for the valuation report.

"Now everyone is in a dilemma, including the Nepal Airlines board, which is reluctant to consent to sell the planes at the throwaway price," said an official at the Tourism Ministry, who wished not to be named as the appraisal report is highly confidential.

"Who will sell the Chinese planes now? No one will dare to do it," the official said, as per The Kathmandu Post.

A spokesperson for Nepal Airlines, Ramesh Poudel, confirmed to the Post without elaborating that they had submitted the appraisal report for the Chinese planes to the Tourism Ministry last month.

"We haven't heard anything since then."

He said that several reports have pointed out that the Chinese-made planes were not commercially and technically viable. "As per reports, it's not feasible to fly them. The only option is to sell them."