Nepal Airlines Corporation (NAC), the national flag carrier, has made a significant loan repayment of Rs. 530.9 million on April 13, 2025. The payment was made toward the loans taken to acquire two narrow-body and two wide-body aircraft for international operations, marking a notable step in the airline’s ongoing debt management efforts.
According to NAC spokesperson Subash Dangi, this latest payment fully covers the installment for the narrow-body aircraft and constitutes a partial payment for the wide-body planes. The repayment was made to the Employees Provident Fund (EPF) and the Citizen Investment Trust (CIT), the two major institutions that had financed the airline’s aircraft procurement.
With this payment, NAC’s total loan repayment has reached Rs. 7.40 billion as of mid-April 2025. These repayments are part of a long-term financial obligation the corporation undertook to modernize its international fleet in a bid to enhance its competitiveness and service quality in the international aviation market.
Loans Taken for Fleet Expansion
NAC had borrowed substantial funds from the EPF and CIT several years ago to support its ambitious fleet expansion program. This included the purchase of two narrow-body Airbus A320s and two wide-body Airbus A330s to strengthen the airline’s international flight capabilities. The decision aimed to reduce Nepal’s dependence on foreign airlines and boost the national carrier’s international footprint.
However, the financial burden of these loans has remained a persistent challenge for the airline, especially in the face of global disruptions to the aviation industry, most notably the COVID-19 pandemic.
COVID-19 Impact and Appeal for Relief
The COVID-19 pandemic had a devastating impact on the global airline industry, and Nepal Airlines was no exception. With prolonged travel restrictions, grounded flights, and a sharp decline in international tourism, NAC’s revenue streams were severely affected. As a result, the corporation faced significant difficulty in keeping up with loan repayments.
In light of these challenges, NAC has formally requested both EPF and CIT to waive interest, compound interest, penalties, and other fines that accumulated during the pandemic period. The airline argues that these additional financial burdens were incurred during an unprecedented global crisis, and a compassionate approach from the lenders is essential for its financial recovery.
The corporation has also proposed a revised repayment schedule, asking for an increase in the number of installments to make the repayment more manageable in the current financial climate. Discussions between NAC and the two institutions are currently underway regarding these proposals.
A Step Toward Financial Stability
This recent payment of over Rs. 530 million underscores Nepal Airlines’ commitment to honoring its financial obligations and its determination to stabilize its economic standing. However, officials acknowledge that without restructuring the existing debt and obtaining relief on accrued interest and penalties, achieving long-term sustainability will be extremely difficult.
NAC’s spokesperson emphasized that the airline is actively exploring all avenues to ensure it can continue to meet its responsibilities while also maintaining essential international operations. “We are committed to repaying our loans and reviving the airline’s performance, but we also need a fair and realistic repayment environment that reflects the operational losses suffered during the pandemic,” Dangi stated.
Strategic Importance of NAC
As the national flag carrier, Nepal Airlines plays a critical role in connecting Nepal with major global destinations and supporting the national economy, particularly in tourism and trade. The airline is often seen as a symbol of national pride and a vital transport lifeline during times of national emergencies and disasters.
Despite criticism over inefficiencies and management issues in the past, recent efforts by NAC to manage its debt, rationalize operations, and restructure its repayment obligations have been viewed as positive steps.
A favorable response from EPF and CIT regarding the interest and penalty waiver could be a game-changer for NAC. It would not only ease the financial pressure on the airline but also allow it to reinvest resources in service improvements, fleet maintenance, and route expansion.
Way Forward
While the loan repayment of Rs. 530.9 million signals progress, experts believe that structural reforms, better financial planning, and professional management will be essential for the long-term revival of the airline. Government support and accountability will also play a vital role in ensuring that Nepal Airlines can sustain itself and compete effectively in the international aviation market.
Negotiations between NAC and the two lending institutions are expected to continue in the coming weeks. A mutually agreeable solution could provide much-needed breathing space for the airline as it works to recover from the aftershocks of the pandemic and move towards a more stable financial future.
