Finance Ministry approves Lufthansa strategic partnership with NAC
24th Jan, 2018 | Tourism Mail Crew
KATHMANDU, Jan 24: The Ministry of Finance has agreed to make German company Lufthansa a strategic partner in the Nepal Airlines Corporation. The proposal of Lufthansa Consulting regarding strategic partnership has been approved by the corporation. The Ministry of Culture, Tourism and Civil Aviation had sent a proposal three months earlier to the Finance Ministry asking for approval on the matter.
"The Ministry of Finance has agreed to bring strategic partners in accordance with the laws of Nepal," said Suresh Acharya, Chief and General Secretary of the Aviation Department of the Ministry of Culture, Tourism and Civil Aviation. Acharya said that after the final phase of discussion, the decision to bring in Lufthansa Consulting as strategic partner will be decided by the Council of Ministers.
The Ministry of Culture, Tourism and Civil Aviation has sent a letter to the Ministry for approval, with the conclusion that Lufthansa would be earmarked for the strategic partners of corporation. Lufthansa will get 35-42 percent of the annual profit as a strategic partner. The company had proposed 35 percent of the corporation's profit in the first year, 40 percent second year and 42 percent of the third year.
Lufthansa will receive 688 million 676 thousand and 471 rupees as a three-year strategic partnership fee. Lufthansa proposed a fee of 247 million 650 thousand rupees in the first and second phase and 338 million 625 thousand rupees for the third phase.
Lufthansa plans to find the weaknesses of the Corporation for the first four weeks at the first phase, come up with a plan for restructuring in the first five months of the second phase, and to start the implementation in the third phase. The Ministry of Culture, Tourism and Civil Aviation has sent a letter to the Ministry for approval, with the conclusion that Lufthansa will be earmarked for strategic partners of corporation.
Lufthansa will handle the Corporation's engineering department, operation department, finance department and marketing department. However, the ground handling work will not be seen.
Although the Ministry has proposed to keep strategic partners in the Corporation for the next 10 years, Lufthansa proposed three years in the first phase and two years of partnership will be made in the second phase. With the approval of Ministry of Finance, the Tourism Ministry will send the proposal to the Council of Ministers for the final decision. The corporation earns Rs 4 billion from the ground handling yearly, and marked a profit of 50 million rupees last year. The NAC is expected to bear loss of 2 billion 500 million rupees yearly if it does not continue ground handling.