Nepal Airlines making another attempt to sell its failed aircrafts in Junkyard price

Nepal Airlines, the national flag carrier, announced its intention to auction its 5 Chinese Aircraft viz. two MA-60s and three Y12s on December 21, 2023. The decision follows unsuccessful attempts to sell these aircraft earlier in the year. Acquired by the Nepalese government in the early 2010s, these planes were retired in 2020 due to being considered unreliable, expensive to operate, and unsuitable for local weather conditions.

The MA60s, registered as 9N-AKQ and 9N-AKR, were manufactured by China’s Xian Aircraft Company. The three Y12s, registered as 9N-AKS, 9N-AKT, and 9N-AKV, were built by the Harbin Aircraft Manufacturing Corporation, also based in China.

The auction terms stipulate that the aircraft are sold on an “as is where is basis,” each with a designated floor price. Interested parties are required to submit sealed tender documents along with a bank guarantee for 10% of the bid amount. The bid deadline is February 4, 2024.

The auction process involves board approval of bids by Nepal Airlines, issuance of a letter of intent to the highest bidder, signing a contract within 60 days, and the winning bidder paying the remaining amount within 30 days. Additionally, the successful bidder must remove the aircraft from Tribhuvan International Airport in Kathmandu within 180 days.

Earlier attempts to sell these aircraft faced challenges, including pushback from the Chinese Embassy concerned about the perception of airworthiness and a suggestion in October by Aviation Asset Management Inc. to sell the aircraft at their scrap value.

The five aircraft are offered on an as-is-where-is basis. Nepal Airlines has previously attempted to lease or sell these planes multiple times, most recently earlier this year when the Chinese Embassy in Kathmandu reportedly pressured the airline not to proceed with the sale or, alternatively, not to discount the price, fearing it would convey the wrong message about the planes. In October, Aviation Asset Management Inc., based in the US, submitted a report recommending that the five aircraft be sold for their scrap value.

The Nepalese government acquired the planes on behalf of the carrier in the early part of the last decade. However, by 2020, the airline had retired them, citing their unreliability, high operating costs, and unsuitability for local flying conditions. Nepal Airlines has reportedly incurred losses of NPR 2 billion (USD 15 million) from flying and storing the aircraft.

The two MA60s are 9N-AKQ (msn 1007) and 9N-AKR (msn 1008). 9N-AKQ, built in December 2013, has completed 3,316 cycles, while 9N-AKR, built in November 2016, has flown 3,415 cycles. The three Y12s are 9N-AKS (msn 026), 9N-AKT (msn 027), and 9N-AKV (msn 029). 9N-AKS, manufactured in June 2014, has completed 2,333 cycles. 9N-AKT, built in March 2015, has flown 1,424 cycles, and 9N-AKV, built in September 2015, has completed 1,386 cycles. All five aircraft are being sold with their engines intact. The initial tender documentation does not provide information on the planes’ airworthiness. However, each aircraft has a floor price, and on-site inspections are available by prior arrangement.

The initial tender documentation states that a letter of intent (LOI) will be issued to the selected bidder after obtaining approval from the Nepal Airlines Corporation board. The bidder must accept the LOI within 15 days from the date of issuance. The successful bidder will be required to sign a contract with the airline within 60 days after accepting the LOI. Failure to sign the contract within the specified time allows the airline to cancel the purchase offer. The winning bidder must deposit the full amount due within 30 days of signing the contract and remove the aircraft from Kathmandu’s Tribhuvan International Airport within 180 days.

The complete set of tender documentation is currently available at the airline’s corporate office. Bids close on February 4, 2024, at 1300L (0715Z) and must be accompanied by a bank guarantee for 10% of the bid amount, valid for 90 days. Unsuccessful bidders will have their bank guarantees returned.

Interested parties can obtain the full set of tender documentation at Nepal Airlines’ corporate office, and the deadline for bids is February 4, 2024, at 1300 local time.