DHAKA: Biman, Bangladesh’s loss-making airline, said on Tuesday it was struggling to pay salaries as it formally announced it was seeking a strategic partner to bail it out of its financial woes.
The carrier, which racked up a record loss of more than 120 million dollars in the financial year ended on June 30, published ads in local newspapers headlined ‘Seeking strategic partner for Biman Bangladesh Airlines’.
“We have floated the international tender seeking a partner to run our business jointly,” M. Abdul Momen, the airline’s chief executive, said.
“From our side we need new cash funds, new aircraft and expertise to run Biman’s operations,” he said.
“We are in a very difficult position. We no longer have the ability and resources to run our business. Last month, we even struggled to pay monthly salary to our employees,” he said.
“We are looking for a marriage, which will make both the partners happy,” he added.
Under any deal, Momen said, the strategic airline partner would manage Biman and supply aircraft in exchange for access to the national flag carrier’s dozens of international destinations. It also might take an equity stake.
“Modus operandi and detail terms and conditions may be decided through subsequent negotiations,” the airline’s advertisements said.
Potential airline partners must submit their bids by October 11, according to the ads.
Biman’s heavy loss in the last financial year was attributed to higher fuel and maintenance costs. In the previous year, it lost 41 million dollars.
In addition, the company owes around 4.00 billion taka (59 million dollars) to Bangladesh’s state-owned Petroleum distribution company.
Last month Biman sought a financial rescue package of 95 million dollars from the government.
“But so far it has not given us a penny,” a senior Biman official said, speaking on condition of anonymity.
Biman operates 155 domestic and 25 international flights a week with five DC-10 aircraft that are at least 20 years old, four Airbus 310s bought in the early 1990s and three Fokker F-28 aircraft.
Last month the carrier suspended Saturday flights to New York in a bid to cut its losses and said it planned to halt services to other international destinations soon.
In May, Biman started informal talks with carriers from the Middle East to find a strategic partner but failed to reach agreement with any airline.
A senior foreign banker blamed the airline’s financial woes partly on Biman’s longstanding policy of buying old aircraft.
He said corrupt officials made money from the purchases of old planes by inflating the cost, thereby increasing the burden on Biman’s balance sheet, as there was no straight-forward procedure for valuing such aircraft.
“For new aircraft, everybody knows the price and it’s difficult to make money. But for old aircraft, nobody knows what the price should be,” he said. —AFP
