Kathmandu, January 15

Nepal Airlines Corporation (NAC) today issued a letter of intent (LoI) to an American leasing company, AAR Corp, to supply two-wide body Airbus A 330-200 aircraft. AAR Corp was selected from among the bidders by NAC board led by secretary of Ministry of Culture, Tourism and Civil Aviation.

The NAC board has selected the lowest bidder, AAR Corp, which has proposed to supply each aircraft for $104.8 million. As per Sugat Ratna Kansakar, managing director of NAC, negotiations with the supplier will be held very soon in Kathmandu. "Cost of the aircraft and delivery date will be finalised during the negotiations," Kansakar told The Himalayan Times.

There were six bidders in the final round and the NAC board selected AAR Corp due to the appropriate rate it proposed and the credibility of the company. The bid evaluation committee had evaluated the proposals of 10 bidders but four did not qualify in the initial stage itself.

In the request for proposal, AAR Corp has offered to deliver the first aircraft by September 2017 and the other by March 2018.

Currently, NAC has two narrow-body Airbus aircraft and one narrow-body Boeing aircraft in its international fleet, which has been covering eight destinations.

The average flight range of the A 330-200 series aircraft will be nine to 10 hours. NAC is preparing to fly to Japan and South Korea after adding two wide-body aircraft. So far, the national flag carrier has received landing permit for South Korea and Saudi Arabia. According to Kansakar, NAC has approached civil aviation authority of Japan to receive landing permit and in long run NAC has plans to expand its network to Australia and Europe.

NAC has approached government owned Employees Provident Fund (EPF) and Citizen Investment Trust (CIT) and also private banks to obtain loan to purchase the two aircraft. NAC in the past too had obtained loan from the aforementioned government owned financial institutions and they have been charging nine per cent interest rate from NAC. "This time we have also approached private banks and they are positive about financing the deal as a consortium," informed Kansakar. NAC expects the private banks to quote an interest rate that is lower than that of the EPF and CIT.

The government has said it will stay as a guarantee for the loan that NAC is planning to obtain.

As supplier has been issued LoI and invited for negotiations, NAC will soon finalise loan agreement with the government owned financial institutions, as per Kansakar.