Nepal Airlines Sinks Deeper Into Crisis With NPR55 Billion Debt

Nepal Airlines is facing a deepening financial and governance crisis in 2026, with the national carrier's debt ballooning from an original NPR 36 billion to approximately NPR 55 billion while maintenance failures, corruption allegations and unanswered safety queries from foreign regulators pile up simultaneously.

This is not an airline going through a rough patch. It is an institution in structural collapse.

The Debt That Kept Growing While Nobody Was Watching

Nepal Airlines originally borrowed the funds in fiscal years 2013-14 and 2017-18 under government guarantee to purchase aircraft, NPR 31.33 billion from the Employees' Provident Fund and NPR 21.12 billion from the Citizen Investment Trust. The failure to make timely payments has pushed total liability to NPR 550.4 million in accumulated interest penalties alone. 

The provident fund and investment trust money is not abstract government capital. It is retirement savings and citizen investments being used to keep a chronically loss-making airline airborne. Every year the debt grows without repayment, ordinary Nepalis with money in those funds are effectively subsidising an airline they cannot reliably fly on.

A Safety Incident China Is Still Waiting to Hear About

On February 6, 2026, a Nepal Airlines Airbus A320 operating from Guangzhou was involved in a ground mishap in the airport's takeoff area. China's Civil Aviation Administration wrote formally to NAC requesting detailed clarification, navigation procedures, visibility conditions, communication protocols, runway surface status. Standard regulatory procedure after any reported safety event. NAC's response, according to the investigation, has been inadequate. When one of the world's most rigorous aviation regulators sends a formal safety query and receives silence, the consequences can extend well beyond a single incident report. 

The Corruption Running Underneath It All

In April 2026, a pilot named Roshan Koirala was added to a roster for expensive Airbus A320 type-rating training in Kuala Lumpur, then pulled from it hours before departure. The investigation into how he got on that list and how he was removed revealed a pattern of nepotism and private benefit running through NAC's management that has repurposed a national institution for personal gain. 

The maintenance failures follow the same pattern. An A320 was ferried to Israel Aerospace Industries for engine work in January 2024, a leased replacement engine was installed, and NAC then failed to pay USD 2.9 million in outstanding rent, leading IAI to order the aircraft grounded. NAC subsequently approved USD 6.7 million to repair an additional engine. Decisions of that scale, made without apparent financial planning or board oversight, are how NPR 36 billion becomes NPR 55 billion.

What Actually Needs to Happen

Nepal's aviation sector sits at the gateway to some of the world's most valuable tourism, Everest expeditions, Annapurna trekking, Himalayan tourism that generates hundreds of millions in annual economic activity. A functional national carrier should be capitalising on that. Instead, NAC is cancelling Middle East flights, failing to respond to Chinese regulators, and watching its debt compound while governance reforms get deferred indefinitely.

The Auditor General has now put the numbers on the table publicly. The question is whether anyone in Kathmandu acts on them, or whether this time next year the debt reads NPR 70 billion and the conversation starts again from scratch.