Biman inks $1.26b deal with Boeing today
Saturday, 15 March 2008
A Z M Anas
Biman will seal an initial deal with American aerospace giant Boeing today (Saturday) to buy eight aircraft valued at US$1.26 billion, in a move officials said will upgrade its aging fleet.
Under the preliminary accord, the ailing airline will place orders for four Boeing 777-300 ER and four Boeing 787-8 to replenish its existing fleet, most of which are aged between 19 and 27 years, they said.
"This is by far the largest investment in aircraft purchase by Biman," director planning of Biman Nafees Ahmad Imtiazuddin told The Financial Express Friday.
"The signing of a memorandum of understanding will take place today. Initially, we will provide a booking fee of $1.54 million to Boeing for the purchase deal. The money is refundable in case Biman decides to back out of the deal," Imtiazuddin added.
He said the latest energy-efficient Boeing planes will help cut Biman's losses, making it a commercially viable entity.
Last week, Mahbub Jamil, special assistant to the chief adviser on civil aviation, also said Biman will break-even financially by the end of this fiscal before becoming a profitable concern by fiscal 2009.
The cash-strapped Biman, which incurred losses of US$100 million in the fiscal 2007 after a record loss of $120 million in the year before, has moved to buy new aircraft to replace and replenish its aging fleet.
Biman officials said nearly 70 per cent of the carrier's losses can be attributed to the fuel-guzzling fleet.
The financial woes forced the carrier, which became a public company last year, to retrench as many as 2000 jobs and cut eight non-viable international flights and four domestic routes.
Biman's board, reconstituted last month, decided to award the contract to Boeing, analysing the offers made by the US aircraft maker and its European rival, Airbus. The board found the Seattle giant's offer "more favourable."
Officials said the average price of each 777-300 ER will be $182 million while that of 787-8 plane $133 million.
Once procured, the eight aircraft will bring Biman Bangladesh Airlines Limited's fleet size to 20 from 12.
Boeing will make delivery of the 463-seater 777-300 ER between July and August 2013 and the 294-seater 787-8 between July-December 2017, according to the draft agreement.
Instead of seeking funds from the government, the national flag carrier opted for securing loan mostly from the US Exim bank that will finance up to 85 per cent of the total costs. The residual funds will be raised from a syndicate of local banks.
Repayable in 12 years, the interest rate on Exim bank's loans will be nearly 6.0 per cent. But Biman officials said the interest rate might go down to 5.0 per cent after Bangladesh becomes a signatory to the Cape Town Convention.
If ratified, the international treaty will allow Biman to obtain low-cost financing from global lenders, while also enabling international financiers to buy-back aircraft in case of default in loan repayment by the Bangladeshi carrier.
Officials said Boeing will not only deliver aircraft, but also provide technical and financial supports for staff training, route planning, upgradation of the airport, and preparation of a marketing strategy for the carrier.
Before the delivery of the passenger planes, Boeing will lease Biman four used 777-300ER in 2009 and 2010 and four used 787-8 in 2011-12 to help the national flag carrier cope with a surging passengers' growth.
Meanwhile, in an apparent attempt to pacify Airbus, Biman officials said the airlines will launch talks with the Airbus next month for procuring short-haul aircraft.
Biman will seal an initial deal with American aerospace giant Boeing today (Saturday) to buy eight aircraft valued at US$1.26 billion, in a move officials said will upgrade its aging fleet.
Under the preliminary accord, the ailing airline will place orders for four Boeing 777-300 ER and four Boeing 787-8 to replenish its existing fleet, most of which are aged between 19 and 27 years, they said.
"This is by far the largest investment in aircraft purchase by Biman," director planning of Biman Nafees Ahmad Imtiazuddin told The Financial Express Friday.
"The signing of a memorandum of understanding will take place today. Initially, we will provide a booking fee of $1.54 million to Boeing for the purchase deal. The money is refundable in case Biman decides to back out of the deal," Imtiazuddin added.
He said the latest energy-efficient Boeing planes will help cut Biman's losses, making it a commercially viable entity.
Last week, Mahbub Jamil, special assistant to the chief adviser on civil aviation, also said Biman will break-even financially by the end of this fiscal before becoming a profitable concern by fiscal 2009.
The cash-strapped Biman, which incurred losses of US$100 million in the fiscal 2007 after a record loss of $120 million in the year before, has moved to buy new aircraft to replace and replenish its aging fleet.
Biman officials said nearly 70 per cent of the carrier's losses can be attributed to the fuel-guzzling fleet.
The financial woes forced the carrier, which became a public company last year, to retrench as many as 2000 jobs and cut eight non-viable international flights and four domestic routes.
Biman's board, reconstituted last month, decided to award the contract to Boeing, analysing the offers made by the US aircraft maker and its European rival, Airbus. The board found the Seattle giant's offer "more favourable."
Officials said the average price of each 777-300 ER will be $182 million while that of 787-8 plane $133 million.
Once procured, the eight aircraft will bring Biman Bangladesh Airlines Limited's fleet size to 20 from 12.
Boeing will make delivery of the 463-seater 777-300 ER between July and August 2013 and the 294-seater 787-8 between July-December 2017, according to the draft agreement.
Instead of seeking funds from the government, the national flag carrier opted for securing loan mostly from the US Exim bank that will finance up to 85 per cent of the total costs. The residual funds will be raised from a syndicate of local banks.
Repayable in 12 years, the interest rate on Exim bank's loans will be nearly 6.0 per cent. But Biman officials said the interest rate might go down to 5.0 per cent after Bangladesh becomes a signatory to the Cape Town Convention.
If ratified, the international treaty will allow Biman to obtain low-cost financing from global lenders, while also enabling international financiers to buy-back aircraft in case of default in loan repayment by the Bangladeshi carrier.
Officials said Boeing will not only deliver aircraft, but also provide technical and financial supports for staff training, route planning, upgradation of the airport, and preparation of a marketing strategy for the carrier.
Before the delivery of the passenger planes, Boeing will lease Biman four used 777-300ER in 2009 and 2010 and four used 787-8 in 2011-12 to help the national flag carrier cope with a surging passengers' growth.
Meanwhile, in an apparent attempt to pacify Airbus, Biman officials said the airlines will launch talks with the Airbus next month for procuring short-haul aircraft.