Nepal Airlines Looks to Offload Chinese Planes at a Fraction of Their Cost

Nepal Airlines faces a challenging predicament as it endeavors to divest its fleet of Chinese aircraft, which have proven to be more troublesome than anticipated. The national flag carrier, having acquired six planes between 2014 and 2018 at a total worth of NPR 6.66 billion in grants and loans, now finds itself seeking to sell the remaining five aircraft at NPR 220 million, prompting concerns over the paltry returns on this sizable investment.

Troubled by persistent breakdowns and a shortage of pilots, operating these aircraft has not only strained the company’s finances but also contributed to its burgeoning debt. This situation led the state-owned carrier to place all planes in deep storage in July 2020.

As per insiders at Nepal Airlines Corporation, the current asking price of NPR 220 million was determined by an independent international assessor, with one official characterizing it as “scrap value.” An appraisal report by American company Aviation Asset Management Inc further underscored the commercial and technical infeasibility of the Chinese-made planes.

The Ministry of Tourism is now faced with the decision of whether to greenlight the sale at this nominal price, a prospect that has garnered skepticism within the airline and aviation industry.

Nepal Airlines remains resolute in its determination to part ways with the grounded fleet, despite the challenges it poses in recouping a fraction of the initial investment. The situation reflects the complex dynamics of managing and divesting assets in the aviation sector, and the consequential financial implications that ensue.