Buddha Air’s Revenue Recovers to Pre-Pandemic Levels, Cost Gap Narrows Sharply

KATHMANDU: Buddha Air, Nepal’s largest private-sector airline, generated Rs 10.31 billion in revenue during the first nine months of the fiscal year 2025/26, while the company has continued its policy of retaining most of its earnings and distributing only around 1% of net profit as dividend.

The airline recorded operating revenue of Rs 10.316 billion during the nine-month period of FY 2025/26. The latest financial performance comes amid rising aircraft maintenance and engine overhaul costs, higher aviation turbine fuel (ATF) prices and a decline in passenger traffic.

Buddha Air had generated Rs 13.673 billion in revenue in FY 2024/25, an increase of 3.38%, or Rs 448 million, compared to revenue of Rs 13.226 billion in FY 2023/24.

The company’s revenue has grown significantly over the past decade, despite the sharp impact of the COVID-19 pandemic on the aviation industry.

Buddha Air’s annual revenue stood at:

• FY 2024/25: Rs 13.673 billion
• FY 2023/24: Rs 13.226 billion
• FY 2022/23: Rs 12.169 billion
• FY 2021/22: Rs 10.098 billion
• FY 2020/21: Rs 3.336 billion
• FY 2019/20: Rs 4.942 billion
• FY 2018/19: Rs 6.808 billion
• FY 2017/18: Rs 6.08 billion

Buddha Air Maintains Market Leadership

Established in 1996, Buddha Air is Nepal’s largest private airline and the country’s longest-running private-sector carrier. The airline operates primarily on major domestic routes and also operates international flights from Kathmandu to Varanasi and Kolkata in India.

The airline currently operates a fleet of 15 aircraft, comprising one ATR-42 and 14 ATR-72 aircraft. The fleet was reduced to 15 aircraft following the sale and retirement of three aircraft.

Buddha Air says it continues to maintain its position as Nepal’s largest domestic airline based on passenger numbers, with an estimated 57% market share.

The company’s market share has declined from approximately 60% in the previous year, but it has retained its position as the market leader.

Company Retains Most Profits

Buddha Air has been retaining most of its profits to strengthen its financial position rather than distributing large dividends to shareholders.

The company says it distributed only around 1% of its net profit as dividends in FY 2023/24 and FY 2024/25, retaining the remaining earnings within the company.

According to the airline, excess cash flow has been used to make regular repayments on long-term debt while also reducing short-term borrowing.

The company also said that some short-term loans were repaid ahead of schedule using insurance claim proceeds received following the aircraft accident in Bhadrapur.

As of the end of April 2026, the ratio of net working capital to operating revenue stood at approximately 9%.

The airline also has around 71% unused debt drawing capacity, which includes the value of debt-free aircraft held as collateral.

Rising Costs Put Pressure on Operating Margins

Despite the recovery in revenue, Buddha Air’s operating profitability has come under pressure.

The company’s operating profit margin fell to 8.2% in the first nine months of FY 2025/26, compared with 10% in the previous year and 19.4% two years earlier.

The airline attributes the decline primarily to higher engine maintenance and overhaul costs and an increase in aviation turbine fuel prices amid geopolitical tensions in West Asia.

The increase in maintenance expenses has emerged as a significant challenge for the airline, particularly as its fleet requires regular engine overhauls and other heavy maintenance work.

At the same time, higher fuel costs have increased the airline’s operating expenses, putting further pressure on margins.

Revenue Per Seat Recovers, But Cost Gap Narrows

Buddha Air’s Revenue per Available Seat Kilometre (RASK) had recovered to approximately Rs 21.2 by April 2026, returning to pre-pandemic levels.

However, the increase in employee expenses and aircraft maintenance costs has also pushed up the airline’s Cost per Available Seat Kilometre (CASK).

As a result, the gap between revenue and cost per available seat kilometre has narrowed to approximately Rs 2.8, one of the lowest levels recorded by the company in the past five to six years.

The corresponding gap stood at around Rs 8.9 in 2019, indicating the extent to which rising operating costs have squeezed the airline’s profitability.

Passenger Numbers Decline by 10%

Buddha Air has also experienced a decline in passenger traffic.

Passenger numbers during the first nine and a half months of the last fiscal year were approximately 10% lower than during the corresponding period of the previous year.

The airline’s Passenger Load Factor (PLF) has also declined in recent years. While the load factor stood at approximately 92% in 2022, it has fallen to around 83–85% in recent years.

The decline in passenger numbers and load factor has added further pressure to the airline’s revenue generation and profitability.

The company is facing a challenging operating environment in which passenger demand, fuel prices, maintenance costs and foreign exchange movements are all affecting its financial performance.

Buddha Air Carries Rs 3.12 Billion in Rupee Debt, $13.75 Million in Dollar Debt

The airline currently has total debt equivalent to Rs 3.12 billion and US$13.75 million.

Of the rupee-denominated debt, Rs 1.13 billion and the entire US$13.75 million are classified as long-term debt.

The company also has Rs 870 million in short-term loans, an Rs 870 million overdraft facility and Rs 250 million in bank guarantees in use.

Foreign exchange risk remains a major financial concern for Buddha Air. Around 63% of the company’s total bank debt is denominated in US dollars, while a significant portion of aircraft maintenance, spare parts and related expenses are also paid in US dollars.

As a result, fluctuations in the exchange rate between the Nepali rupee and the US dollar can significantly affect the company’s financial position and operating costs.

Financial Outlook Remains Tied to Cost Management

Buddha Air’s latest financial performance highlights the contrasting trends facing Nepal’s aviation industry. While revenue has recovered to strong levels and the airline continues to dominate the domestic market, rising maintenance expenses, fuel costs, lower passenger traffic and foreign exchange exposure are putting pressure on profitability.

The airline’s decision to retain most of its profits and limit dividend distribution to around 1% reflects its focus on strengthening its balance sheet, servicing debt and maintaining liquidity.

With a fleet of 15 aircraft and a dominant share of Nepal’s domestic passenger market, Buddha Air remains a key player in the country’s aviation sector. However, its future financial performance will increasingly depend on its ability to control aircraft maintenance costs, manage foreign currency exposure, improve passenger load factors and maintain revenue growth amid rising operating expenses.