High interest rates, fleet expansion delays and staff shortages push Nepal Airlines into crisis

Kathmandu, October 2, 2026 — Nepal Airlines is facing growing financial and operational difficulties due to high-interest debt, delays in fleet expansion and shortages of technical personnel, according to acting General Manager Janak Raj Kalakheti.

Kalakheti provided the information during Friday’s meeting of the International Relations and Tourism Committee of the House of Representatives.

He said five wide-body captains had recently resigned over dissatisfaction with the corporation’s services and facilities. If their resignations are accepted, he warned, Nepal Airlines could face difficulties operating its wide-body aircraft.

“The situation regarding human resource management is concerning. Five wide-body captains have resigned. If their resignations are approved tomorrow, there could be problems operating the wide-body aircraft,” he said.

Kalakheti said the corporation is struggling to retain pilots and engineers because foreign airlines generally offer comparatively higher salaries.

He also said maintenance of the wide-body aircraft engines has been affected after bidders showed little interest in a tender due to complicated bank-guarantee provisions.

Debt burden adds to crisis

According to Kalakheti, Nepal Airlines is struggling to meet loan repayments and interest costs, putting the commercial future of the national flag carrier at risk.

He said loans taken from the Employees Provident Fund and Citizen Investment Trust carry interest rates ranging from 9.5 to 10.5 percent, creating a significant financial burden for the corporation.

The situation has become more complicated because lenders have refused to restructure the loans until outstanding dues are cleared. Kalakheti said the interest charged even during the COVID-19 period has added more than Rs 7 billion to the corporation’s debt burden.

“The main problems of Nepal Airlines are high interest rates and a large debt burden. While market interest rates are around 4.5–5.5 percent, the average interest rate charged by the Employees Provident Fund and Citizen Investment Trust is around 9–10.5 percent,” he said. “The lenders’ position that interest can be restructured only after old arrears are cleared is beyond the corporation’s capacity. Therefore, active government intervention is necessary for debt restructuring.”