Debt-laden Agni Air goes under the hammer

KATHMANDU, JAN 04 -

Debt-ridden Agni Air has been put up for auction by a consortium of banks that financed the carrier which has failed to meet the loan repayment deadline.

The consortium on Thursday issued a seven-day auction notice for the sale of Agni’s five aircraft—three Jetstream 41s and two Dorniers—spare parts and land plots in Bhaktapur. The banks—Grand Bank, Sunrise Bank and International Leasing and Finance Company—have lent Rs 650 million to Agni Air .

Sunrise CEO Surendra Man Pradhan said the notice was issued in consensus with Agni’s promoter Sudhir Basnet. Earlier, the banks had given the cash-strapped carrier until mid-December to pay up or face foreclosure. “We issued the notice after the airline failed to resume operations,” Pradhan said.

Basnet, who had planned to sell the airline’s assets to repay the bank loans, had been looking for funds to bring the airline back into operation after his attempts to sale the company failed. “We expect to recover our loans from the auction,” Pradhan said, adding Basent has not paid interests since Mid-July.

Basent himself can bring a potential purchaser during the auction, Pradhan said.

Basnet has huge liabilities in the real estate sector as a majority of his housing projects have not been completed, and the flow of cash has stopped. The airline, which earned profits in the last fiscal year, was also affected by the promoter’s other liabilities. Agni Air has been grounded since the mid-November 2012. The airline not only owes a huge amount to banks, it has also not paid its staff and landing and parking charges to the Civil Aviation Authority of Nepal.

CAAN officials said the airline owes around Rs 2.5 million to Nepal Oil Corporation and around Rs 6 million to CAAN. The airline has not paid salaries worth Rs 10 million to its staff. Started in 2006, Agni, which owns five aircraft, has only a Dornier in an airworthy condition.

Agni’s woes began with problems in the real estate sector as its key promoter Basnet is one of the biggest realty players of the country. A recession in the realty sector stopped Basnet’s cash flow which also affected the airline. Basnet has been blacklisted by the Credit Information Bureau for defaulting bank loans.

In the first nine months of 2012, Agni Air ’s passenger movement dropped by 41.76 percent to 81,943. The carrier’s market share slid to 7.13 percent in the first nine months of last year, according to Tribhuvan International Airport statistics.

Source: The Kathmandu Post