Nepal's Ministry of Tourism has asked the government for a NPR20 billion Nepalese rupee (USD193 million) cash injection into Nepal Airlines (RA, Kathmandu) to aid its restructuring plan. The capital increase will also assist the airline to engage Lufthansa Consulting as a strategic partner, reports the Kathmandu Post.
"We have proposed to the government to issue fresh equity shares to jack up the corporation's paid-up equity capital to NPR20 billion," said Tourism Ministry joint secretary, Buddhi Sagar Lamichhane.
As previously reported, Lufthansa Consulting was the only firm to submit a proposal to provide strategic management services to the national carrier. An evaluation report by a specially-convened government committee approved Lufthansa's proposal, and it is now before the Finance Ministry for final sign-off.
If the partnership is approved, it is expected to last for at least three and up to ten years. Lufthansa Consulting would take over operations and management, and it would share gross profits with Nepal Airlines in air services. Ground handling operations, which are currently profitable, would be separated from the airline.
Lufthansa's proposed fee is NPR688.67 million (USD6.671 million) for diagnostic and implementation services.
"After the management contract, we can induct a strategic partner or privatize the airline to improve its service standards," said joint secretary Lamichhane. "Therefore, a sound financial health is necessary to ensure its survival."
