KATHMANDU: Nepal Airlines is facing a growing risk of grounding its two international wide-body aircraft as all four engines approach mandatory overhauls, while a five-month procurement process to repair or lease replacement engines remains unresolved.
A grounded wide-body aircraft costs the financially troubled national carrier at least Rs 15 million in lost daily revenue, according to company sources. The delay in selecting an engine maintenance and leasing company could eventually leave both aircraft grounded.
The airline’s Boeing 777-200ER with the call sign 9N-ALY has only about 180 flight cycles remaining before its engine maintenance deadline. One takeoff and landing counts as one cycle. At four cycles a day, the aircraft has roughly 45 days of operating capacity left, potentially less during periods of heavier flying.
The pressure will increase after the second wide-body, 9N-ALZ, is sent to Italy for a C-check on August 10. The aircraft has about 450 flight cycles remaining. Nepal Airlines has been limiting flight cycles for the past six months to preserve aircraft availability, a policy that has also reduced revenue.
The airline first invited bids on April 5 to overhaul and lease four engines, but received no proposals. A second procurement process launched on June 25 attracted an application from Abu Dhabi-based Sanad Group. However, the proposal is now expected to be cancelled, forcing Nepal Airlines to restart the process.
An airline source said at least one wide-body grounding is now highly likely. The second aircraft could also face grounding within three months unless a supplier is selected quickly.
The financial impact could be severe. Nepal Airlines estimates that keeping an aircraft grounded during a prolonged engine overhaul could cost up to Rs 3 billion in lost operating revenue. Engine overhaul can take four to six months, while securing replacement wide-body engines has become increasingly difficult and expensive amid global supply constraints and disruptions linked to the Russia-Ukraine war.
Leasing a wide-body engine currently costs more than $20,000 a day. The airline could therefore face a bill exceeding Rs 10 billion for overhauling four engines and leasing four replacement engines.
Nepal Airlines is already struggling with debt and cash shortages. Its aircraft-related debt, originally around Rs 34 billion, has risen to nearly Rs 50 billion. Monthly debt instalments are also increasing, with the payment expected to reach around Rs 1.3 billion from the next fiscal year.
The carrier has been seeking financial support from the Ministry of Culture, Tourism and Civil Aviation to fund the engine overhaul and leasing. With aircraft earnings already insufficient to cover operating and debt-servicing costs, grounding either wide-body aircraft would further intensify the airline’s financial pressure.
