Bangladesh airline struggles to survive but it does not look too good.

Victoria
By Victoria January 4, 2012 22:30

Bangladesh airline struggles to survive but it does not look too good.


Biman Bangladesh Airlines met today for an emergency board meeting and although no one yet knows what was discussed at the same our man in the room gives us an idea of the conversation:

Biman Bangladesh Airlines owes BDT24.70bn (BDT82.02 = $1) to its fuel supplier Padma Oil, more than BDT27bn to the Civil Aviation Authority of Bangladesh and BDT560m to national board of revenue in travel taxes. In addition, its London office is in debt to various airports and organizations. Our man at the carrier says the situation is so bad that the airline cannot bring one of its aircraft home from Singapore after overhaul through lack of funds.
During all this financial woe the airline will have to pay a three-month installment of around BDT600m each for two new 777-300 aircraft purchased in Q4 2011. The first installment is due this month. The average load factor of the two new 777-300 aircraft was 55% in November and 63% in December. Indeed, Biman is incurring losses on 16 out of 18 routes it now operates. The two profit-making routes are Dhaka-Singapore and Dhaka-Jeddah.

The airline has incurred a loss of over BDT20bn in 2010-2011. During that period the airline has suffered from rises in jet fuel prices like all other airlines but has continued to use DC aircraft on routes. The airline has also seen employee salary payments rise during the period which is highly damaging

Airline management seem lost for a plan after incurring a loss of BDT10bn in Q1 2011 following a decision to increase fares through a fuel surcharge in January last year. Now this year they are having a massive ticket sale with flights priced so low profit cannot be possible.

Government intervention is needed at pace to save this airline, it is not the first and will not be the last to need such help in this market.

Victoria
By Victoria January 4, 2012 22:30
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