Two airlines eye struggling Agni Air

Debt-ridden Agni Air is in ‘serious talks’ with prospective buyers. Multiple sources said two airline companies—Yeti Airlines Domestic Pvt Ltd and Swift Air Nepal—are in the race to acquire the struggling domestic carrier.

The airline is currently grappling with multiple problems—huge bank loans, staff payment dues, landing and parking charge dues to Tribhuvan International Airport.

Sources say Agni Air had initially priced its entire property and aircraft at Rs 1 billion. However, given the mounting pressure from lenders, it has now lowered the price to Rs 850 million, a source said.

Tuesday’s talks failed to reach a conclusion over the price. “The negotiation will continue on Wednesday,” said an Agni Air official on condition of anonymity. According to sources, one of the prospective buyers had offered Rs 620 million during Tuesday’s talks.

Officials from Agni’s lenders were also present during the talks. Three banks and financial institutions—Sunrise Bank, Grand Bank and International Leasing and Finance Company—had given loans to the airline. “The loans stand around Rs 650 million,” said the source, adding the deal could be finalised within a week.

Started in 2006, Agni Air owns five aircraft—three Jetstream 41 and two Dornier. However, only one aircraft—Dornier—is in airworthiness condition. Other four aircraft have remained grounded due to technical glitches.

Two weeks ago, the Civil Aviation Authority of Nepal (CAAN) suspended the operation of Agni Air, citing its failure to settle fuel, landing and parking charges. CAAN officials said the airline’s owes around Rs 2.5 million to the Nepal Oil Corporation and around Rs 6 million to CAAN. The airline has not paid salaries worth Rs 10 million to its staff.

Agni’s woes began with the problems in the real estate sector, given its key promoter Sudhir Basent, one of big real estate players, defaulted huge loans taken from different banks and financial institutions.

Sensing the possible outflow of funds to pay other liabilities of Basnet, lenders of the airline had made a separate arrangement for the loan payment, excluding Basnet from the management team, according to a senior official of a lending bank. “As per the arrangement, Agni would have to pay the outstanding loans first from the income generated from its operation,” said the bank official.

In its heydays, Agni Air used to operate in eight destinations within the country, including mountain flights. In the first half of 2012, it stood third among the domestic airlines in terms of passenger carriage.

source: The Kathmandu Post,28 Nov 2012