VZCZCXRO8580
OO RUEHCI
DE RUEHKT #0202/01 0720825
ZNR UUUUU ZZH
O 130825Z MAR 09
FM AMEMBASSY KATHMANDU
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9926
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 6879
RUEHLM/AMEMBASSY COLOMBO PRIORITY 7195
RUEHKA/AMEMBASSY DHAKA PRIORITY 2514
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 5239
RUEHLO/AMEMBASSY LONDON PRIORITY 6390
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 2938
RUEHCI/AMCONSUL KOLKATA PRIORITY 4538
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 KATHMANDU 000202 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR ETRD EINV PREL PTER EAID NP
SUBJECT: PROSPECTIVE SALE OF BOEINGS TO NEPAL AIRLINES MAY 
FACE CHALLENGE 
 
Summary 
------- 
 
¶1. (SBU) According to a Washington, D.C.-based representative 
for Boeing Corporation, Maoist-led Government of Nepal 
representatives have indicated that the prospective purchase 
by state-owned Nepal Airlines Corporation (NAC) of Boeing 
aircraft is conditional on the lifting by the U.S. of the 
terrorist designations against the United Communist Party of 
Nepal (Maoist).  Samir Sahgal, who is Boeing's Director for 
International Operations in D.C., told Emboff March 10 that 
an economic adviser to Prime Minister Dahal had conveyed that 
message in meetings in the United States in late 2008. 
According to Sahgal, NAC has already provided Boeing with a 
request for information regarding the purchase of up to six 
aircraft.  Boeing anticipates a formal request for proposal 
soon, and is eager to make sales, but is concerned that 
Airbus may beat it to the punch. 
 
Airplanes and Terrorist Tags 
---------------------------- 
 
¶2. (SBU) During a phone call to post on March 10, the 
Director for International Operations in Boeing Corporation's 
Washington, D.C. office, alerted Emboff that the prospective 
purchase by state-owned Nepal Airlines Corporation (NAC) of 
Boeing aircraft was encountering some snags.  According to 
Samir Sahgal, the Maoist-led Government of Nepal (GON) has 
informed Boeing that it is interested in acquiring Boeing 
aircraft.  But he noted that an adviser to the Prime 
Minister, Pramod Kafle, had indicated that any purchase would 
be conditional on the lifting by the United States of the 
terrorist designations against the United Communist Party of 
Nepal (Maoist).  Sahgal said that Kafle had passed along that 
message in a late 2008 visit to the U.S., including a trip to 
Boeing headquarters in Seattle.  The International Operations 
Director stated that Suvendoo Ray, who is Boeing's Director 
for Sales for Nepal, had heard the same refrain when he met 
senior GON officials in Kathmandu in January 2009.  Ray did 
not share this information when he met the Ambassador. 
 
NAC Looking for Planes; Boeing Eager To Sell 
-------------------------------------------- 
 
¶3. (SBU) Sahgal informed Emboff that Boeing had received a 
request for information in mid-February from the Managing 
Director of NAC that spelled out NAC's interest in up to six 
large aircraft.  The International Operations Director said 
he anticipated receiving a formal request for proposals from 
NAC in the coming weeks.  Boeing had aircraft available and 
was offering good terms, including a very low down payment 
and probable Export-Import Bank financing, but Sahgal was 
concerned that the continuation of the terrorist listing 
would preclude a sale.  Even if the listing did not prevent 
NAC from deciding to buy a Boeing aircraft, the question 
arose if any sale of aircraft by Boeing would run afoul of 
Office of Foreign Assets Control restrictions.  He asked what 
the likelihood was of the designations being lifted any time 
soon.  He expressed concern that Airbus would take advantage 
of the situation to replace the airline's existing fleet of 
Boeings with Airbus aircraft. 
 
Comment 
------- 
 
¶4. (SBU) When Boeing's Director for Sales met with the 
Ambassador in January, Ray highlighted his concern that 
Airbus was trying to prevent Nepal Airlines from buying 
Boeing aircraft.  Ray failed to mention that the Maoists were 
conditioning a sale on lifting of the terrorist designations. 
 Finance Minister Baburam Bhattarai indicated in his budget 
speech in September 2008 that the GON was prepared to issue 
sovereign guarantees for two large aircraft and his 
government claims to be serious about boosting tourism.  NAC 
is desperately in need of new aircraft.  In the short term, 
as Boeing concedes, the airline requires leased aircraft in 
order quickly to rebuild its market share and reputation 
which persistent flight cancellations and mechanical failures 
over several years have badly jeopardized.  Boeing seems to 
think the airline can be revived and is prepared to assist. 
The GON would be wise to seize the opportunity without any 
political conditions. 
 
KATHMANDU 00000202  002 OF 002 
 
 
POWELL