Nepal Airlines is making more money, still losing money

Nepal's flag carrier, Nepal Airlines Corporation (NAC), is showing signs of recovery with increased revenue, but its financial struggles persist due to uncontrolled expenses. Prime Minister Balendra Shah recently highlighted encouraging recovery signs, noting that the airline generated Rs6.27 billion in revenue in just four months with an 86 percent occupancy rate and repaid Rs1.06 billion in loan installments.

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the airline had generated Rs6.27 billion in revenue in just four months, achieved an 86 percent occupancy rate and repaid Rs1.06 billion in loan instalments.

However, the airline's own preliminary annual figures for the last fiscal year present a less optimistic scenario. NAC estimates revenue of approximately Rs23.40 billion against expenses of about Rs24.40 billion, projecting a deficit of roughly Rs1 billion. These figures are preliminary, as final financial statements are pending compilation of data from various stations, according to corporate director and spokesperson Archana Khadka.

Despite the projected deficit, NAC's revenue in fiscal year 2025-26 rose by about 12.5 percent from the previous year's Rs20.50 billion. This suggests an increase in business activity. However, the airline failed to meet its ambitious budget target, which projected total revenue of Rs37.85 billion against expenditure of Rs37.72 billion, aiming for a surplus of Rs125 million.

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income and expenditure figures from several stations were still being compiled. The preliminary figures should therefore not be treated as final, she said, adding that both revenue and expenses could rise once the accounts are completed.

Ground handling remains a crucial revenue stream for NAC, estimated at Rs5.71 billion for the last fiscal year, an increase from the previous year. Khadka noted that while the West Asia conflict temporarily impacted international flight numbers, revenue from ground handling has since recovered due to an increase in international airlines operating in Nepal. NAC provides these services to most international carriers at Tribhuvan International Airport, with Air India being a notable exception. The budgeted target for ground handling revenue was Rs7.92 billion, which the preliminary actual figure falls short of.

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the number of international flights had fallen temporarily because of the West Asia conflict, but the impact did not last long. Revenue from ground handling has since increased as more international airlines have begun operating in Nepal, she said.