Prime Minister KP Sharma Oli on Monday came down heavily on 'non-performing' Nepal Airlines Corporation saying that repeated management failures were just not acceptable.

Addressing the 61st anniversary of the national flag carrier, he said that the corporation had become 'critically ill'. "Why is state-owned Nepal Airlines in the red while private players are making profits?” he asked.

The prime minister said mockingly that the only achievement it can show on its 61st anniversary is the accumulation of loans worth Rs36 billion. “How to make Nepal Airlines a success is a big question,” he said. “The corporation is in a coma, and its turnaround will not be easy.”

Oli gave a few examples of how the airline had been stumbling from one fiasco to another. “The company buys the planes first and finds the pilots to fly them later. Again, it procures wide-body jets but it doesn’t have destinations to fly to. There is high demand for services to Japan’s Narita International Airport, but it decides to fly to Kansai International Airport in Osaka instead. Planes of other companies are in the air, but Nepal Airlines planes are seen on the tarmac at Tribhuvan International Airport all the time. All this shows that there is no preparation at all. It’s not the planes that have caused losses, it’s the management,” the prime minister said.

The cash-strapped corporation has now started defaulting on loans. This is the first time the carrier has failed to repay debts even though it has a long history of poor financial performance. Nepal Airlines could not repay the principal and interest to two state-owned financial institutions. According to the carrier, it has defaulted on two quarterly instalments of Rs1.18 billion to the Employees Provident Fund and one quarterly instalment of Rs730 million to the Citizens Investment Trust. The corporation said that it would not be able to pay the third instalment either.

Once the pride of Nepal and the ruler of the Nepali skies, the venerable carrier has lost some of its shine in recent years. It has started knocking on the government's door asking for a bailout. In 2017, Nepal Airlines asked for Rs20 billion from the government to raise its paid-up capital to support its financial restructuring plan. The flag carrier has been struggling to manage its cash flow since it inducted two brand new Airbus A330 jets into its fleet last year, as they remained largely under-utilised for months for lack of routes.

Under the current circumstances, the government will not be able to bail out the corporation because it will keep on asking for money in the future too, Oli said. “However, if the corporation comes up with a solid plan to improve its efficiency, we are ready to finance the ailing airline,” said Oli. “I will sit with the management of Nepal Airlines to discuss a proper solution.”

Last week, Finance Minister Yuba Raj Khatiwada informed Parliament that the government had a turnaround plan for the debt-ridden corporation that includes capital restructuring and inducting a strategic partner. Responding to questions from parliamentarians in the House of Representatives on behalf of Prime Minister KP Sharma Oli, who also holds the tourism portfolio, Khatiwada said, "The corporation’s worrisome legacy is long, and it did not start with the present government. But we cannot evade our responsibility.”

Khatiwada said that the government had rescheduled the interest payment deadline for its loans taken from state-owned financial institutions. Currently, the corporation owes more than Rs36 billion to various institutions, which means interest payments totalling Rs3.66 billion annually.

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