Nepal Airlines planes were leased: 2018 Airbus press release

By Ram Khatry
17 February 2019

A 2018 press statement by Airbus has been found to clearly mention that the two planes at the centre of Nepal Airlines Corporation (NAC) scandal were leased. NAC boss, on the other hand, has been claiming that the two A330s were bought by Nepal’s national flag carrier.

People in the South Asian nation are still looking for a conclusive solution to the puzzle; they want to know whether the planes were bought or leased. They expect the widebody planes to have been bought because that’s exactly why the NAC had borrowed NRs 24 billion from two financial entities in the country.

“Nepal Airlines has taken delivery of the first of two A330s, which it will lease from Portuguese lessor Hi Fly,” reads the Airbus statement dated 28 June 2018 – the day the first of the two widebody planes arrived at the Tribhuvan International Airport.

The list price for an A330-200 when Hi Fly placed its firm order at the 2017 Paris Air Show was $233.8 million. Thus, the total cost for Annapurna and Makalu would have been $467.8 million. But how did NAC manage to get the two aircraft for only $209.6 million which is less than 50% of Airbus’ original price tag? Why would Hi Fly give a 54 percent reduction to NAC? Questions remain unanswered.

A quote of Hi Fly chairman and CEO Paulo Mirpuri that appeared on ATW magazine’s website in June 2017 also suggests that he was looking forward to the arrival of the two planes to enhance his own fleet. “This acquisition is part of our strategy to renew our fleet and progressively own all the aircraft we operate,” chairman and CEO Paulo Mirpuri was quoted as saying by the ATW magazine’s website.

If the 2017 list price of A330-200 is to be taken into account then NAC would have required more than double the amount it borrowed, which was only Rs 24 billion.

Source: Air Transport World monthly magazine

A latest news report coming out of Kathmandu appears to highlight Government of Nepal’s lack of sincerity in resolving the widebody debacle.

The Government had formed a judicial probe committee on January 4 to investigate the suspected corruption in the procurement of the widebody planes. However, a news report published by a Nepali-language media claimed that the 45-day mandate of the committee ended last Saturday without any of its members even starting the investigation.

The government never ever contacted the proposed members of the committee, Nayapatrika claimed. They were also not given any terms of reference which puts a question mark on the Nepalese government’s readiness to put an end to the widebody saga.

The judicial committee was to be headed by former chief judge of Patan Appellate Court Gobinda Prasad Parajuli, former deputy attorney general Narendra Pathak and chartered accountant Madan Sharma.

It is noteworthy that the Nepalese government had formed this judicial committee just a day after a sub-committee of the Public Accounts Committee (PAC) recommended action against a list of suspected officials that included tourism minister Rabindra Adhikari as well as his predecessors Jitendra Narayan Dev and Jeevan Bahadur Shahi. Nepal had lost Rs 4.35 billion to corruption in the purchase of the two A330s, the parliamentary sub-committee had concluded.

This article has been edited to reflect correct list price of A330-200 in 2017. 18Feb2019 11:36 AEST

One thought on “Nepal Airlines planes were leased: 2018 Airbus press release

  1. Mr. Khatry, I found that you did not conduct an elaborate research before writing this piece. The prices listed by Airbus are just ‘list price’. It is an open secret that airlines get up to 60% discount on this particular aircraft. So, NAC’s $210 million is actually sufficient to buy two new aircraft of this type. Despite this fact, it seems, NAC actually leased these planes from HiFly-X. You are right where quoted Airbus’s press release of June 2018. So, looking at other facts which have recently transpired along with Airbus’s press release, it seems the aircraft are actually in long-term (Finance) lease. In these types of arrangements the assets (aircraft) remain with lessee (NAC) for almost the full economic life. So, the major issue in this case is the full amount ($210 million) the NAC has deposited at the escrow account, despite the planes being on lease. Huge amount of loss in terms of lost interest.

Add Comment