Biman's financial health to come under scrutiny

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S M Jahangir
The government has taken up step to carry out a detailed financial assessment of the newly corporatised Bangladesh Airlines to help initiate the necessary corrective measures for turning the national flag carrier into a viable entity.
Simultaneously, a comprehensive study will also be conducted to see both of its present operational status and future market potential, official sources said.
"A process is underway to carry out a thorough audit on the Biman's actual financial health and also a study for exploring its business prospects," a senior Civil Aviation and Tourism Ministry official said.
Apart from the financial audit, it is also important to rearrange its flight operations with special thrust on the potential destinations, said the official.
Such initiatives aim to make the Biman operationally sound and commercially viable, he noted.
Since a process is on to make the state-run Bangladesh Biman Corporation a PLC, there is a need to see the real picture regarding the assets and liabilities before flotation of its share in the stock market, official sources said.
The council of advisers at its June 23 meeting approved the draft Bangladesh Biman Corporation (Amendment) Ordinance-2007 with a view to converting it into a PLC.
Besides, a revised draft on the proposed 'Memorandum of Association and Articles of Association of the Biman Bangladesh Airlines Limited is awaiting approval of the advisers' council.
The Ministry of Civil Aviation and Tourism recently placed the updated draft, a ministry official said.
The draft on the Memorandum of Association and Articles of Association of Bangladesh Airlines was placed earlier before the council meting. The advisers asked the concerned ministry to re-examine the initial one and place it again before the council.
Sources, however, said initially, the government decided to convert the Biman into a PLC without floating its share.
The decision on the flotation of share will be taken after assessing the Biman's financial condition, they said.
"The government finds itself in a difficult situation to float the share without knowing about the actual assets and liabilities of the Biman," said an official.
He also said the authorities still remain undecided about how and what percentage of the Biman's share will be floated in the market.
Some experts have already suggested that the government should consider looking for a strategic partner along with handing over certain portion of its share to the public through the country's stock market.
The government had decided earlier to convert the loss-making Bangladesh Biman Corporation into a public company with a view to preventing mismanagement and rationalising its manpower.
According to the decision, the government will shoulder the liabilities of Biman and turn it into a public limited company with zero liability after June 30, said the sources.
Initially, the Biman will be a fully government-owned company and its board of directors will have seven to 10 members.
Officials, however, indicated that the government would gradually offload up to 49 per cent of the shares to the private sector, sources said.
Under the current move to make the Biman a PLC, the authorities have already decided to cut 1,593 jobs at various levels to reduce its manpower from around 5,000 to 3,400 under a voluntary retirement scheme (VRS).
It has also sought necessary fund from the government to implement the VRS, sources said, adding that about 2,800 employees of Biman have already applied for the same.
According to available official figures, the Biman owes around Tk 20 billion to different agencies, including Tk 15 billion to the Bangladesh Petroleum Corporation on account of purchasing fuel and Tk 3.0 billion to the Civil Aviation Authority of Bangladesh.
It incurred a loss of around Tk 12 billion in fiscal 2006-07 alone, sources mentioned.