Nepal Airlines Reissues $1 Billion Loan Request Amid Acquisition and Expansion Plans

Nepal Airlines has relaunched its appeal for a substantial loan exceeding USD1 billion, following an initial lack of response from financial institutions to its January 2024 call for expressions of interest (EOIs). This move underscores the national carrier’s urgent need for financial backing to address its significant loan liabilities, fund new aircraft acquisitions, and construct a hangar, aligning with its broader strategy for modernization and expansion.

The airline’s decision to reissue the EOI, while keeping the previously received applications sealed and unopened, reflects its determination to secure favorable loan terms. Nepal Airlines is specifically seeking about USD415 million to manage existing loans, USD565 million for fleet expansion, and USD38 million for infrastructure development, totaling an investment of USD1.018 billion. This ambitious financial endeavor is contingent upon approval from the Nepalese government and relevant authorities.

Key loan conditions outlined by Nepal Airlines include a 25-year repayment period with a potential extension, a fixed interest rate throughout the loan’s term, and quarterly repayments. The airline also proposes securing the loans with liens on the newly acquired assets and infrastructure, offering a form of security to potential lenders.

Nepal Airlines, which currently operates a modest fleet of two DHC-6-300s, two A320-200s, and two A330-200s, has faced considerable financial challenges, including high debts and operational inefficiencies. The carrier’s push for a significant loan is seen as a crucial step toward addressing these issues, enhancing operational efficiency, and bolstering its competitive stance in the aviation market.

The reissued loan request presents an opportunity for financial institutions to contribute to the revitalization of Nepal’s flagship airline, supporting its objectives for fleet modernization and infrastructure development. As the deadline for submitting EOIs is set for April 11, 2024, Nepal Airlines anticipates a more favorable response from lenders, paving the way for its strategic plans to unfold.