Biman on new course
Friday, 27 July 2007
The state-owned Biman Bangladesh Airlines, which operated since its inception as a corporation under the government, officially started the other day its journey as a public limited company (PLC), registered under the Companies Act 1994. The change of its status, with the new name-Biman Bangladesh Airlines Limited (BBAL), may be ultimately prove as meaningful as that of a person acquiring a new name through an affidavit. The framers of the Act could have perhaps envisioned that the government would form and own companies in future as well. But as it appears from the said law, they failed to appreciate what makes privately owned companies conduct their affairs better in a marked distinction from those owned and run by the government. The law contains no provision, directly or by implications, to indicate that those who would manage state-owned companies should be on their toes and always alert, like owners of private companies or private limited companies, to avoid personal losses.
Owners of private companies or private limited companies earn bankruptcy or, at least, obligations to settle liabilities of their organizations when these become insolvement or close down. Their personal commitment for better running the companies thus comes from the constant possibility of incurring personal liabilities. They also enjoy enormous degree of freedom in making decisions for and on behalf of the companies and in conducting their affairs. Thus, freedom and obligations run concurrently in their cases enabling and inducing them to exercise full freedom in managing the companies in the most efficient manner, and they do so to avoid personal liabilities. Will the board of management of the BBAL enjoy equal freedom and face the similar possibility of incurring personal obligations while running the airline?
The managing board of the company, comprising some bureaucrats under the chairmanship of a senior one, is expected to run it, as per the companies Act, independently and take its own decisions including those about procurement of new aircraft. But the fact that they are civil servants, tied by rules to non-bureaucrat government leaders, may not always enable them to act on their own, ignoring unseen influences. It means, the possibility of Biman, even as a company, not performing remarkably well in future remains. It would be better under these circumstances to go ahead for floating the shares of the national flag carrier for private subscription as soon as possible. The induction of some private directors from amongst its share subscribers would then help create balance and guard the government directors from possible unseen pressure.
As a corporation, Biman reportedly lost about Tk 21 billion. Its fleet comprising old aircraft, which often went unworthy of flying failing the airline in maintaining flight schdule, has tarnished its image. The new management board will have to decide to procure several new aircraft to replace some of the vessels of the old fleet soon. Unless it is equipped with sufficient funds to do so, it will not be able to restore the shattered image of the Biman with better operational efficiency. In that case, the transformation of the airline from a corporation into a public limited company may prove no more meaningful then changing a person's name through an affidavit.
Owners of private companies or private limited companies earn bankruptcy or, at least, obligations to settle liabilities of their organizations when these become insolvement or close down. Their personal commitment for better running the companies thus comes from the constant possibility of incurring personal liabilities. They also enjoy enormous degree of freedom in making decisions for and on behalf of the companies and in conducting their affairs. Thus, freedom and obligations run concurrently in their cases enabling and inducing them to exercise full freedom in managing the companies in the most efficient manner, and they do so to avoid personal liabilities. Will the board of management of the BBAL enjoy equal freedom and face the similar possibility of incurring personal obligations while running the airline?
The managing board of the company, comprising some bureaucrats under the chairmanship of a senior one, is expected to run it, as per the companies Act, independently and take its own decisions including those about procurement of new aircraft. But the fact that they are civil servants, tied by rules to non-bureaucrat government leaders, may not always enable them to act on their own, ignoring unseen influences. It means, the possibility of Biman, even as a company, not performing remarkably well in future remains. It would be better under these circumstances to go ahead for floating the shares of the national flag carrier for private subscription as soon as possible. The induction of some private directors from amongst its share subscribers would then help create balance and guard the government directors from possible unseen pressure.
As a corporation, Biman reportedly lost about Tk 21 billion. Its fleet comprising old aircraft, which often went unworthy of flying failing the airline in maintaining flight schdule, has tarnished its image. The new management board will have to decide to procure several new aircraft to replace some of the vessels of the old fleet soon. Unless it is equipped with sufficient funds to do so, it will not be able to restore the shattered image of the Biman with better operational efficiency. In that case, the transformation of the airline from a corporation into a public limited company may prove no more meaningful then changing a person's name through an affidavit.