Namaste Air takes over troubled Agni Air management

KATHMANDU, MAY 10 - 2013

Debt-ridden Agni Air has been taken over by new management in a partnership deal. According to a pact signed between Agni Air and start-up carrier Namaste Air, its fleet of three Jetstream 41s and two Dorniers will be operated under a partnership scheme for the next five years.

Under an agreement signed on Wednesday, Namaste will lease all Agni aircraft, but will only operate the Jetstreams in its livery. The Dorniers will bear Agni’s livery. Namaste will look after the entire management.

“We have decided to work together under the partnership model which will be a win-win situation for all three parties,” said Raju KC, chairman of Namaste Air. “The partnership agreement will be valid for five years.”

According to KC, all grounded jets have been sent for maintenance and operation of the two Dorniers will begin from the second week of June under Namaste’s management. The Jetstreams will come into operation by July-end.

Namaste is promoted by a group of investors from Pokhara. The carrier said that it would be operating flights to Pokhara, Bhadrapur, Biratnagar, Nepalgunj, Bhairahawa, Jomsom, Lukla, Dhangadhi and Bharatpur besides mountain viewing flights. “We have planned to go for full-fledged operation from September after adding two ATR 72s to the fleet,” KC said.

Agni Air has been grounded since mid-November. The carrier’s woes began when the bottom fell out of the real estate market as its key promoter Sudhir Basnet defaulted huge loans taken from different banks and financial institutions.

The consortium of banks that have invested in Agni has asked Namaste to submit its detailed business plan on Friday. Grand Bank, Sunrise Bank and International Leasing and Finance Company (ILFCo) have lent Rs 650 million to the troubled airline. “We have asked Namaste to submit its detailed business plan, including its strategy to repay bank loans,” said Anil Dhungel, chief executive officer of ILFCo.

Grand Bank, Sunrise Bank and International Leasing and Finance Company have lent Rs 650 million to Agni. A recession in the realty sector stopped Basnet’s cash flow which also affected the airline. The banks had given the cash-strapped carrier until mid-December 2012 to pay up or face foreclosure.

The carrier was then put up for auction by the banks in January after it failed to meet the loan repayment deadline. A seven-day auction notice was issued for Agni’s assets. However, the Appellate Court stayed the banks’ move after a complaint was filed suspecting ill motive to put the carrier into short auction.

Source: The Kathmandu Post

Two airlines eye struggling Agni Air

KATHMANDU, NOV 28 - 2012

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