Agni Air gears up for another take-off

Debt-ridden Agni Air is likely to get a new lease of life , with some officials of the airline and travel sector players coming together to bring it back into operation.

Grounded since mid-November 2012, Agni Air was put up for auction by a consortium of banks that financed the carrier after it failed to meet the loan repayment deadline. But a court order has put the auction process on hold.

Both the Agni officials and the banks confirmed the development.

According to an Agni Air official, heads of the operation, engineering, marketing departments and some travel trade entrepreneurs have formed a ‘loose group’ to revive the airline. The source added that the new group is seeking to operate the airline by contracting the aircraft for few years.

The group will submit its ‘revival plan’ or ‘business plan’ on Monday to the banks that financed the carrier. “The group will also seek additional loans worth Rs 200-250 million from the consortium,” the Agni official said, adding four of the five aircraft will come into operation by mid-February if the banks accept their proposal. “We expect to repay the proposed fresh loan within 12-14 months of our operation, while other dues will be cleared gradually.”

The consortium, including Grand Bank, Sunrise Bank and International Leasing and Finance Company, is also positive on extending necessary help to airline. The consortium has lent Rs 650 million to the carrier.

“We are ready to entertain a proposal that is bankable, ensures smooth cash flow and secure the interest all parties,” said a chief executive of a consortium bank. “Currently, both the sides are on the verge of losing. We can convert it into a win-win situation.”

With the airline not clearing interest for the last two quarters, the banks want the interest to be paid first so that the credit would turn into good loans and they would not be compelled to make huge provisioning.

According to the banks, the airline has to pay Rs 100 million in interest. A banker made it clear that they were also ready to extend additional loans to the new party based on their proposal.

Agni officials said both the sides are in the situation of getting ‘something for nothing’ and that a new deal will be beneficial for both the parties.

The new group says it will bring the two grounded aircraft back into operation within a week in the first phase. Another aircraft will come into operation within the next 10 days, while one will need at least one and half months to start flying. Agni, which owns five aircraft, has only a Dornier plane in an airworthy condition.

The carrier has around 150 employees who have not received salaries for the last three months. The carrier owes around Rs 2.5 million to Nepal Oil Corporation and around Rs 6 million to the Civil Aviation Authority of Nepal.

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 after it failed to meet the loan repayment deadline. A seven-day auction notice was issued for the sale of Agni’s properties. However, the Appellate Court stayed the banks’ move after a complaint was filed suspecting ill-motive to put the carrier into short auction.

Agni’s woes began with problems in the real estate sector as its key promoter Sudhir Basnet is one of the biggest realty players of the country. A recession in the realty sector stopped Basnet’s cash flow which also affected the airline.