The financial condition of state-owned Nepal Airlines Corporation has worsened significantly, with the national flag carrier facing mounting debt and growing concerns over its long-term sustainability.
According to the 63rd report of the Office of the Attorney General, the corporation’s outstanding loans climbed to Rs 55.78 billion by the end of the last fiscal year, marking an increase of nearly Rs 19 billion over the past decade.
In 2013, Nepal Airlines borrowed Rs 36 billion to purchase Airbus A320 and A330 aircraft. The financing included Rs 22 billion from Employees Provident Fund and Rs 12 billion from Citizen Investment Trust.
At present, the airline owes Rs 31.33 billion to the Employees Provident Fund and more than Rs 21.12 billion to the Citizen Investment Trust. The OAG has directed the corporation to develop an annual repayment schedule to clear its liabilities.
The report also states that Nepal Airlines’ financial indicators have dropped far below acceptable levels. A broader assessment of Nepal’s aviation sector conducted in November 2025 by a five-member committee led by former Supreme Court Justice and then Minister for Industry, Commerce and Supplies Anil Kumar Sinha also described the airline’s condition as alarming.
Government findings indicate that the corporation is moving toward insolvency and is increasingly unable to meet its financial obligations. Its debt-to-equity ratio has fallen to a negative 12.33, showing that liabilities have significantly exceeded assets and the company’s paid-up capital has turned fully negative.
Frequent political changes and repeated interventions in executive leadership, along with weak governance and poor financial planning, have further hindered efforts to revive the airline.
Analysts also point to long-standing corruption and controversial procurement decisions as major factors behind the airline’s decline. In particular, the purchase of four Y12e and two MA60 aircraft from China between 2014 and 2018 caused substantial financial losses. The deal, financed through grants and loans totaling Rs 6.66 billion, added further pressure to the corporation’s already fragile financial position.
