Nepal Airlines Corporation (NAC) has drafted a cost optimisation plan to deal with the current financial crisis in the organisation.
Lack of human resources, unpaid instalments of purchased aircraft, grounded aircraft, low business and fewer international destinations are some of the major reasons behind the financial crisis facing the national flag carrier. Organising a press meet here today, NAC unveiled its cost optimisation plan that has been divided into revenue maximisation and cost minimisation segments.
“Corporate profit of any organisation depends on revenue maximisation and cost minimisation. Adopting this trend, we have also set up a plan to address our current financial issues,” said Madan Kharel, executive director of NAC.
He further said that for cost minimisation, the national flag carrier has changed a few working systems, while for revenue maximisation it is preparing for expansion of its service areas.
“Analysing the income and expenses of the organisation, we have slashed unnecessary expenses and are trying to spend as little as possible for every single work,” Kharel said. “For instance, we will be signing an agreement with a publisher to publish our in-flight magazine that will save us around Rs 700,000 a year.”
Similarly, re-routing of Kathmandu-Doha flight has helped save NAC $160 per flight. Likewise, NAC has been minimising cost with savings on fuel and hotel accommodation along with building in-house capability to reduce cost on outsourced resources, he added.
With all these measures, the national flag carrier has set a target to annually save around Rs 2.27 billion by the end of this fiscal year.
Similarly, towards revenue maximisation, NAC is preparing to increase its services like ground handling, spare parts maintenance, engineering services and others. In the first three months of the current fiscal, NAC was able to collect revenue worth Rs 4.29 billion and expects to earn Rs 17.25 billion revenue by the end of this fiscal.
“Based on our planning, we are moving ahead rapidly and we have a lot to do in a short time,” Kharel added. He further said that within one year NAC will be a lot better in terms of both service and income.