Biman Bangladesh Airlines needs an urgent cash injection of $50m to meet an immediate financial crisis.
In an official letter, the Biman’s managing director Kevin J Steele sought this financial support from the finance division of the government, said official sources.
Finance Secretary Fazle Kabir received the letter on Monday.
According to the letter, the state-owned airline had a debt of $175m as of August 15.
It said the debt will rise to $220m by 2014-15.
Biman is planning to purchase one GE engine for B777-300ER at $36m by this time.
The Biman authorities said if the immediate cash injection is not made, the outgoing flight costs will need to be significantly cut by $100m.
Besides, the bills to the Padma Oil and the Civil Aviation Authority of Bangladesh (CAAB) could also not be paid in October and the payment for B777-300ER engine would not be possible to be made, the authorities said.
“We need to reduce outgoings. Retiring the fuel-hungry DC 10 in favour of much more fuel efficient B777-300ERs will help but more needs to be done. The next highest cost after fuel is aircraft financing,” Kevin J Steele said in the letter.
Biman needs $53.5m for pre-delivery payment which is due in December this year for the purchase of two new aircrafts of B737-800. If the payment is not made in time, a fine of $7m will be enforced.
At a press conference last month, the MD and CEO of Bangladesh Biman Kevin J Steele informed that the airlines had reduced its losses by $50m in last fiscal year.
“Biman lost around $75m in 2011-12 whilst the results for 2012-13 show this has improved considerably to around $25m.”
He however to told the press conference that both the figures were provisional, un-audited and not approved by the Biman board and the government.
Kevin expressed hope that in the current fiscal they will be able to bring down the losses to $10m and will start making profit by the next fiscal year.
He said despite the fact that Biman’s passenger carrying capacity has been reduced by around 30% this year than that of last year causing fall of revenue, its costs have also come down.