Merger or acquisition a better option for Biman
Tuesday, 26 June 2007
Fazle Rashid from New York
DRAMATIC changes are going on in the airline industry. Once a booming business, the industry is now going through a very critical patch. The immediate reasons for the travails are skyrocketing of oil price and shrinkage of passengers in the US, the focal point of airline business, due to stringent security measures at the airport and restrictions on granting visa since 9/11.
A number of American airlines have sought protection under bankruptcy law. They have frozen wages, declared redundancy and severely cut in-flight services to keep afloat. The story is not the same on the other side of the Atlantic and in Southeast Asia. Though the airlines in these regions do feel the impact of the slowing down of business in America, they are doing brisk business and preparing themselves for receiving mega jumbo jet that will roll out soon from the assembly plants of Airbus and Boeing.
Despite doing good business many major airlines in Europe and Asia have already gone into merger or still looking for good partners. Many airlines have also been acquired by companies outside airline business. If order for new aircraft is any indication, airlines in the UAE are doing brisk business.
Air France and KLM have merged. British Airways, Lufthansa and Air France-KLM are in fray to acquire Spain's national airline. Two major airlines looking for acquisition or merger are Alitalia of Italy and Qantas of the Australia. Alitalia is finding hard to attract anyone for either merger or acquisition.
The order placed with Airbus and Boeing, two major aircraft manufacturers indicate that the airline business is not that bad after all. Boeing has confirmed orders for 435 aircraft and Airbus has received orders for 420. Both Qatar airways and Emirates have plans to strengthen their fleet replacing the aging aircraft with new ones. Airbus and Boeing are riding on a wave of demand for fast growing airlines in emerging markets.
Against this backdrop, turning Bangladesh Biman into a public limited company will not lift it into the air. The authorities concerned in Bangladesh should, instead, try either for merger or acquisition. A partner should not be difficult to find. Biman has many lucrative destinations. Many airlines will be keen on joining Biman to get a chunk of financial benefits that the Biman's lucrative destinations offer.
The government should open dialogue with Thai Airways, Singapore Airlines, Malaysian Airline, Cathay Pacific, JAL, China Airlines in Asia and with Emirates, Gulf, Saudia, Qatar airways, Kuwait airways and such other airlines in the Middle-East which have plenty of cash and will be eager to join Biman to fly to areas with high concentration of Bangladeshi immigrants. And there are quite a number of such destinations like London and New York.
DRAMATIC changes are going on in the airline industry. Once a booming business, the industry is now going through a very critical patch. The immediate reasons for the travails are skyrocketing of oil price and shrinkage of passengers in the US, the focal point of airline business, due to stringent security measures at the airport and restrictions on granting visa since 9/11.
A number of American airlines have sought protection under bankruptcy law. They have frozen wages, declared redundancy and severely cut in-flight services to keep afloat. The story is not the same on the other side of the Atlantic and in Southeast Asia. Though the airlines in these regions do feel the impact of the slowing down of business in America, they are doing brisk business and preparing themselves for receiving mega jumbo jet that will roll out soon from the assembly plants of Airbus and Boeing.
Despite doing good business many major airlines in Europe and Asia have already gone into merger or still looking for good partners. Many airlines have also been acquired by companies outside airline business. If order for new aircraft is any indication, airlines in the UAE are doing brisk business.
Air France and KLM have merged. British Airways, Lufthansa and Air France-KLM are in fray to acquire Spain's national airline. Two major airlines looking for acquisition or merger are Alitalia of Italy and Qantas of the Australia. Alitalia is finding hard to attract anyone for either merger or acquisition.
The order placed with Airbus and Boeing, two major aircraft manufacturers indicate that the airline business is not that bad after all. Boeing has confirmed orders for 435 aircraft and Airbus has received orders for 420. Both Qatar airways and Emirates have plans to strengthen their fleet replacing the aging aircraft with new ones. Airbus and Boeing are riding on a wave of demand for fast growing airlines in emerging markets.
Against this backdrop, turning Bangladesh Biman into a public limited company will not lift it into the air. The authorities concerned in Bangladesh should, instead, try either for merger or acquisition. A partner should not be difficult to find. Biman has many lucrative destinations. Many airlines will be keen on joining Biman to get a chunk of financial benefits that the Biman's lucrative destinations offer.
The government should open dialogue with Thai Airways, Singapore Airlines, Malaysian Airline, Cathay Pacific, JAL, China Airlines in Asia and with Emirates, Gulf, Saudia, Qatar airways, Kuwait airways and such other airlines in the Middle-East which have plenty of cash and will be eager to join Biman to fly to areas with high concentration of Bangladeshi immigrants. And there are quite a number of such destinations like London and New York.