Kathmandu. A high-level study and suggestion committee formed for the reform of the civil aviation sector has suggested splitting the existing Nepal Airlines into 3 companies.
The committee formed under the leadership of Anil Kumar Sinha by the interim government on October 18 has given this recommendation. The committee has suggested to bring IPO through book building method of 2 companies divided into 3 companies for the improvement of the service of Nepal Airlines.
The committee has proposed to split the corporation into three organizations. Accordingly, it has been proposed to make Nepal Airlines Company Limited for international service while Nepal Airlines Company Limited for ground handling.
The committee has proposed to set up Nepal Airlines Corporation for internal service. Among them, Nepal Airlines Company and Nepal Aviation Service Company have been recommended to bring IPO by making them public limited companies. The committee has suggested that the third company should keep internal services under the indirect control of the state.
The committee has stated that since Nepal Airlines will be listed as Nepal Airlines Company and Aviation Service Company (PIBC) Limited, it would be appropriate to enlist Nepal Airlines in NEPSE by issuing shares with certain percentage to the organizations involved in the aviation sector of Nepal by complying with the regulatory requirements.
Similarly, the report states that both the companies should be restructured and maintain a continuous profit-making financial balance sheet for a certain period of their operation, and if this achievement, these companies will be listed in NEPSE and an opportunity will be created to increase the sense of ownership among the citizens by issuing IPOs to provide investment opportunities to the public on the basis of need.
According to the report, the share market value and book value of these companies may increase significantly during the IPO as the book value of the shares of these companies is likely to increase.
Similarly, in case of Nepal Airlines Corporation remaining after the merger of two companies, the government should increase its principal amount from the existing Rs 300 million to Rs 5 billion. The report also suggested that the shares should be allocated.
