Nepal Airlines Corporation (NAC) has asked aircraft supplier US-based AAR Corp for 15 more days to send the pre-delivery order fee as its planned loan has been delayed.

As per the sales and purchase agreement signed with AAR Corp on April 7, the national flag carrier has to pay 35 percent of the total aircraft cost, or Rs8 billion, as pre-delivery order fee within 28 days of signing the contract. 

“Due to the long process of obtaining the loan, we will not be able to send the pre-delivery order fee by May 5 as stipulated in the agreement,” said Rabindra Shrestha, spokesperson for NAC. “So we have requested a 15-day time extension, but we have not heard from them.” 

NAC has signed a $209.6-million contract with AAR Corp to buy two long-range Airbus A330-200, making it the largest ever aircraft purchase deal in Nepal’s aviation history. The two jets are expected to arrive in Nepal by the second quarter of 2018.

The corporation said it was in the final stages of borrowing Rs12 billion each from state-owned lenders Employees Provident Fund (EPF) and Citizen Investment Trust (CIT). 

The loan will be paid out in two disbursements. NAC will receive Rs4 billion each from the CIT and the EPF as the first installment to pay the pre-delivery order fee to AAR Corp. 

The collateral for the loan will be the two aircraft, one for each lender. The government is the guarantor of the loan. 

Earlier, NAC had planned to borrow money from the EPF only. However, the board directed the management to take loans from the two state-owned lenders in order to spread out its debt. 

NAC already owes the EPF Rs10 billion which it borrowed in 2015 to buy two Airbus A320-200 aircraft.

The national flag carrier plans to connect Kathmandu with Seoul in South Korea, Tokyo in Japan, Dammam in Saudi Arabia and Sydney in Australia once it adds wide-body aircraft to its fleet. It has also announced plans to increase flight frequencies to key destinations like Kuala Lumpur, Hong Kong and Doha.