NAC incurs Rs 50m loss

KATHMANDU, June 30: Nepal Airlines Corporation (NAC), the national flag carrier, incurred an operating loss of around Rs 50 million in the last fiscal year, largely due to unavailability of one of the aircraft and rising fuel prices. [break]



The unaudited report of NAC says that the government-owned airline company generated revenue of Rs 2.97 billion in the last fiscal year ended July 2008, whereas its expenditure in the same period stood at Rs 3.02 billion. In the fiscal year 2006/07, the company had generated an operational profit of Rs 610 million, Manik Man Bajracharya, director of NAC´s finance department told myrepublica.com.



“The company incurred a loss last year since one of the airplanes failed to conduct daily flights for eight months due to engine problems,” Bajracharya said. NAC currently has two 757 Boeings purchased some two decades ago and one of them usually lands in the garage due to its old age. One of its planes is currently undergoing regular check-up in Israel and is expected to come back to Nepal on July 15 or 16.



Due to lack of aircraft, NAC on the one hand has not been able to cover many destinations worldwide while on the other has been postponing or canceling many flights. This has also had negative impact on the tourism sector of the country.



Another cause that had eroded the earnings of the company in the last fiscal year was high fuel prices, which had skyrocketed to up to US$146 per barrel in July.

The company´s expenditure on fuel had stood at Rs 1.12 billion in the last fiscal year, whereas it had spent a total of Rs 1.96 billion in the fiscal year 2006/07 when both of its planes were operating for most of the parts of the year. The company´s expenditure on fuel makes up around 40 percent of the company´s total expenditure. In terms of income, the company generates majority of its revenue from passenger ticket sales and ground handling at Tribhuvan International Airport.



In the last fiscal year, the company had generated revenue of Rs 1.50 billion from ticket sales and Rs 934 million from ground handling. Likewise, the company had earned Rs 300 million from tariff levied on excess baggage, Rs 57.10 million from cargo operation and Rs 6.30 million from charter flights operation.



NAC currently has a fleet of six aircraft. Of this, three are Twin Otters which operate on domestic sectors. The airline company flies to six international destinations and in 25 domestic sectors.

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