Nepal plans to sell-off up to 49% of its flag carrier Royal Nepal Airlines to either private investors or a joint venture partner.

"Local buyers will get the first priority but I can't rule out a joint venture with foreigners because we need experienced hands to run the airline," Tourism and Civil Aviation Minister Bal Bahadur K.C. told Reuters.

The decision to sell-off the airline is the latest attempt by the impoverished mountain kingdom to liberalise its economy.

A civil war with Maoist revolutionaries has caused a 70% fall in tourism this year as well as regional tensions between India and Pakistan which has disrupted both trade and travel.

Mounting losses

The carrier reported a cumulative loss of 2.4bn rupees (£20m) to the year ending July 2001.

Royal Nepal has a fleet of eight aeroplanes including two Boeing 757s as well as 44-seater Avros and 19-seater Twin Otters.

It flies to eight foreign cities - including London, Frankfurt, Singapore and Osaka - as well as to over 35 domestic destinations.

Mr K.C. did not name any potential bidders or partners or give a time frame for the sale.