Qatar Airways proposes management takeover of Nepal Airlines Corporation amid financial crisis

Qatar Airways proposes management takeover of Nepal Airlines Corporation amid financial crisis

KATHMANDU: In response to the dire financial situation faced by Nepal Airlines Corporation (NAC), Qatar Airways has formally proposed to assume management responsibilities for the national flag carrier.

The interest from Qatar Airways, which has been longstanding, recently materialized in detailed proposals submitted to the Ministry of Tourism, the Ministry of Finance, and the Prime Minister’s Office. Qatar Airways communicated its willingness to take over the management through the Ministry of Culture, Tourism, and Civil Aviation.

Recognizing the incapacity of the current management to navigate the corporation out of its financial crisis, the government has initiated discussions on a temporary management takeover.

Simultaneously, deliberations on potential strategic partnerships or alternative company models are underway. The government has also acknowledged that the existing management has hindered the removal of the European Union’s blacklist imposed on Nepal.

Qatar Airways had previously expressed interest in managing the corporation four years ago, and recent information from a Ministry of Tourism source indicates a renewed interest.

The source revealed ongoing meetings and discussions between Qatar Airways and relevant government officials, emphasizing the necessity for exploring new corporate reform models to propel the corporation forward.

To facilitate a comprehensive assessment of structural and managerial aspects, the ministry established a committee led by former governor Dipendra Bahadur Chhetri. The committee has recommended that bringing in external partners is essential for effective management.

Qatar Airways has proposed taking charge of the engineering, operations, finance, and marketing departments within the corporation, and, as part of its strategic partnership offer, is willing to handle ground handling operations.

The Civil Aviation Authority of Nepal has decided to open the ground handling job to global competition, emphasizing an impartial selection process.

As part of the first phase, Qatar has proposed a 10-year strategic partnership with the corporation. Ministry sources assert their commitment to exploring new reform models based on past study reports and future recommendations. The study committee, in operation since 2002, has consistently recommended transitioning the corporation to a company model.

The corporation presently possesses two narrow-body A320 and two wide-body A330 aircraft for international flights. Regrettably, the wide-body aircraft within the corporation is unable to execute long-haul flights as originally intended. This has contributed to the corporation experiencing financial losses over the past few years.

While past efforts to move the corporation to a company model faced opposition from employees and was subsequently canceled, the current financial woes, political interference, and a mounting debt of Rs 50 billion necessitate urgent and transformative measures.

Notably, German company Lufthansa Consulting had attempted to become a strategic partner eight years ago, but due to regulatory issues, the process was thwarted despite initial approval from the Ministry of Finance.

Fiscal Nepal |
Wednesday December 6, 2023, 11:34:51 AM |

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