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Ailing Biman wants $200m as commercial loan

  • Published at 06:16 pm January 8th, 2014
Ailing Biman wants $200m as commercial loan

Biman Bangladesh Airlines has requested the government to allow it for a commercial borrowing of $200m to help overcome the financial crisis before the fleet is going to be landed.

Chief executive officer and managing director of the cash-strapped national flag carrier requested the senior officials of finance ministry for some sort of sovereign guarantee against the loan at a meeting recently.

Biman authorities expressed utter fear of becoming a bankrupt airliner soon as it apprehended relevant companies such as Boeing, general electric, leasing companies and fuel companies might put cash-hit Biman on “cash only” categories as the financial deficit of the company rose to over Tk1,500cr.

It would virtually force the company to cease its operations in the coming days, says a meeting source. 

Kevin stressed on the need for injecting around $200m as soon as possible to face the ongoing financial crisis and sought government’s help in arranging such a commercial loan in preferential term.

Total deficit of Biman now stands Tk1,502cr while the outstanding dues stands at Tk1,589cr and available funds stands at Tk87.31cr, according to a Biman statement as of December 15 last year.

Biman has incurred a loss of Tk200 crore in 2012-13 after a loss of Tk600 crore in 2011-12. However, Biman projected the loss would come down to Tk80 crore in the current fiscal with the inclusion of more new generation air craft in its fleet.

Under such a circumstance and financial conditions, state-owned Padma Oil Company has already threatened Biman to stop fuel supply while Boeing also threatened not to supply an engine-changing kit for boroscope checks.

Apart from that Civil Aviation Authority of Bangladesh (CAAB) is also unwilling to lease the offices or business class lounges in both Chittagong and Sylhet airport any further, according to a document revealed from Biman Bangladesh Airlines.

According to Biman officials, the aforesaid commercial bank loans will be used to pay back 50% dues to Padma Oil and also will be agreed on a repayment schedule for the remaining 50%.

Besides, national flag carrier will also pay all the outstanding non-aeronautical charges to CAAB, and other outstanding dues to the National Board of Revenue (NBR)

Apart from that Biman will have to pay all upfront costs for the new B777-300ER aircraft and leased aircrafts while it will pay the rest of the money for paying the dues which has already been increased in maintenance and engineering spares for all the new and leased aircrafts.

It is noted here Bangladesh Petroleum Corporation had earlier got $300m loan twice — first in 2003-2004 when the oil price soared to $56 per barrel from $23 in quick succession and same amount in 2008 when the fuel oil price surged to record $146 per barrel — on commercial interest rate from Standard Chartered Bank.

According to Biman officials, two new Boeing-737-300ER aircrafts are expected to join its fleet by March, next. Biman signed a contract with US aircraft manufacturer, the Boeing Company, to purchase eight aircraft at a cost of more than $1bn or Tk8,728 crore in 2008.

Two aircraft had already been added to the Biman’s fleet in October and November 2011. Apart from procuring the eight Boeings, Biman later ordered for another two Boeing-737-800 aircrafts.