Pilot Exits and Debt Crisis Push Nepal Airlines to the Brink

Nepal Airlines Corporation is facing an escalating operational and financial emergency, marked by the resignation of five senior wide-body captains, mounting debts, and a lingering leadership void. The carrier's acting general manager, Janak Raj Kalakheti, warned lawmakers on Friday that long-haul international flights could soon be paralyzed if those resignations are formally accepted.

Speaking before the House of Representatives' International Relations and Tourism Committee, Kalakheti disclosed that uncompetitive compensation packages have driven cockpit crew toward foreign carriers, Onlinekhabar reported. The airline is concurrently wrestling with onerous borrowing costs on aircraft loans provided by the Employees Provident Fund and the Citizen Investment Trust. With lender interest rates hovering between 9.5 and 10.5 percent—against broader commercial market rates of 4.5 to 5.5 percent—pandemic-era interest capitalization alone added more than NPR 7 billion to the airline's obligations. Creditors have refused debt restructuring requests until past arrears are settled.

At the same parliamentary hearing, Minister for Culture, Tourism and Civil Aviation Khadkaraj Paudel warned that the national flag carrier would already be in liquidation if it were run as a private enterprise, according to Onlinekhabar and Onlinekhabar English. Paudel cautioned that simply expanding the carrier's fleet without executing comprehensive managerial and structural reforms would be futile, while indicating that the government is evaluating a public-private partnership model to salvage the corporation.

The carrier's management troubles follow a turbulent period at board level. As reported by Nepal News, the corporation has lacked a permanent executive chairman for roughly six weeks after the Supreme Court invalidated the appointment of 80-year-old Maheshwar Bhakta Shrestha in late August. Justices Sunil Kumar Pokharel and Balkrishna Dhakal ruled that Shrestha's selection breached the statutory 65-year age cap for public enterprise heads. The court also criticized the tourism ministry's arbitrary selection process after Upendra Bahadur Karki, who had secured the highest score in open merit screenings, was bypassed.

The prolonged absence of an active executive board has compounded severe technical delays. Nepal News reported that one Airbus A330-200, named "Makalu", has remained grounded at maintenance firm Atitech in Italy since August 9 after engine complications arose during a routine C-check. Meanwhile, the airline's second wide-body, "Annapurna", underwent emergency field repairs after sustaining inlet cowl engine damage at Tokyo's Narita Airport in mid-September.

Both wide-body jets are fast approaching mandatory engine overhauls, with Annapurna holding fewer than 170 flight cycles and Makalu fewer than 400. Kalakheti told lawmakers that procurement attempts for Rolls-Royce engine servicing faced major hurdles because prospective international bidders refused to comply with the corporation's rigid bank guarantee clauses, leaving the airline’s overseas route network increasingly vulnerable.