NAC, Airbus sign aircraft purchase agreement

KATHMANDU, JUN 28 -

The Nepal Airlines Corporation (NAC) on Thursday confirmed the order for two Airbus A320-200 planes by signing an aircraft purchase agreement with the European planemaker.

The agreement was signed between NAC Managing Director Madan Kharel and Airbus Senior Sales Director Sheel Sukla at NAC headquarters in Kathmandu on Thursday, formalising the memorandum of understanding (MoU) signed between the two on April 6.

A purchase/sale agreement is a document signed and exchanged after mutual acceptance on an offer, which states the final sale price and all terms of the purchase.

NAC said the catalogue price (the upper limit) of the two planes is $150 million. However, national carrier refused to divulge the exact cost for the jets. Sources said the two planes would cost around Rs 9.80 billion.

With the signing of the agreement, NAC has to pay 8 percent of the catalogue price within the next five working days. The amount also includes $500,000 lock-up money that was paid to Airbus on April 22 to confirm the order under the MoU.

NAC said Airbus will deliver one of the two A320-200 aircraft in February 2015. The second one will arrive in April. “NAC’s aircraft procurement process has finally succeeded after a hiatus five years,” said Kharel, adding the carrier is committed to maintain transparency in the deal.

NAC currently possesses two aging Boeing 757 planes. The latest of the two planes was delivered to NAC in 1978. Since then, every effort to expand NAC’s international had failed.

On June 18, the carrier signed a Rs 10 billion loan agreement with the Employees’ Provident Fund (EPF) to buy the two aircraft it had been eyeing for a long. The interest on the loan has been fixed at 12 percent per annum, and the EPF has given a maximum of 15 years to repay. NAC, however, is hopeful to repay the money in 7-8 years.

NAC is required to make interest payments on a quarterly basis, which amounts to Rs 1.44 billion annually. The two jets themselves will be the collateral for the loan. NAC’s land and building where its headquarters is located have also been put up as security.

 

Source: The Kathmandu Post