NAC decides to award jet deal to AAR Corp of US

Nepal Airlines Corporation (NAC) moved closer to acquiring two Airbus A330-200 long-range jets after its board unanimously agreed to award the supply contract to US-based AAR Corp.

The American aviation support company has quoted a price of $104.8 million for each aircraft.

Following the board’s decision on Saturday night, the corporation issued a letter of intent to the aircraft supplier on Sunday. A letter of intent is a document expressing an intention to enter into a contract at a future date.

“We have asked the supplier to come to Nepal as soon as possible to sign an initial memorandum of understanding (MoU),” said NAC Managing Director Sugat Ratna Kansakar.

“We have targeted concluding the MoU within two weeks so that we can begin detailed technical and financial negotiations.”

He added that a technical team consisting of members of the two parties would be formed to hold detailed negotiations.

Kansakar said that the entire process could be completed within three to four weeks.

NAC said that the ‘offer price’ quoted by the company was not the final price as it may go up slightly due to inflation when final contract negotiations are completed. A purchase agreement will be signed after the negotiations when the cost of the aircraft will be finalized.

A notice inviting proposals from aircraft manufacturers, airlines, aircraft leasing companies and bankers for two Airbus A330-200 aircraft was issued on September 26. There were 11 hopeful suppliers, and the highest price quoted was $146 million.

The national flag carrier has planned to induct one A330 aircraft into its fleet by September and another by March 2018.

NAC has stipulated that the jets should not have more than 1,000 flight hours on them, and that the date of manufacture should not be before January 2014.

The A330-200 it plans to buy can accommodate up to 280 passengers in a two-class layout.

The supplier should include the cost of a minimum set of flight and maintenance crews for the duration of at least one year. It should also include the cost of consumable spares and tools required for day-to-day line maintenance up to the ‘A’ check level for a year.

The carrier has proposed procuring long-range jets to serve destinations in North America, Japan, Australia and the UK as they have been identified as prospective markets for Nepal over the next 20 years.

NAC purchased two Airbus A320-200 aircraft in 2015 by borrowing Rs10 billion from the Employees Provident Fund in its first fleet expansion in 27 years.

The corporation has been negotiating with the Employees Provident Fund, Citizen Investment Trust and a number of commercial banks to get loans at a cheaper interest rate. The Finance Ministry has agreed to act as a guarantor for the loan NAC plans to take.ek