Govt under US pressure for guarantee to BimanShakhawat Hossain
Dhaka is under pressure from Washington to provide Bangladesh Biman with sovereign guarantee to take the delivery of two planes from US aerospace company Boeing, officials said.
The United States has intensified its efforts recently after the government started showing reluctance at giving the guarantee to Biman, which has failed to minimise its losses.
Without the guarantee, Biman cannot meet payment liability for the delivery of the two aircraft in 2014 in line with a deal with Boeing on procuring 10 planes by 2019 at a cost of $1.3 billion.
Biman which took the delivery of two Boeing 777-300ER planes in October and November 2011 struck the deal to make the airlines profitable by replacing its age-old fuel-guzzling planes.
The US ambassador in Dhaka, Dan Mozena, has urged the finance minister, Abul Maal Abdul Muhith, in a letter on August 5, to ‘expedite the approval process’ of the sovereign guarantee for the national flag carrier’s next two Boeing aircraft delivery.
According to the letter the US ambassador sent, Biman has already missed a number of deadlines ‘for pre-delivery payments for the next two aircraft’ from the manufacturer.
He disclosed that Boeing had been forced to postpone the delivery until April-May 2014 with the new deadline set for October 1, 2012.
Boeing has, moreover, waived $42 million in interest, fees and pricing adjustment that would normally accrue after Biman missed the original deadline, Mozena said.
The latter was seen by New Age.
The Biman officials said that next payment liability is more than $300 million.
They said that Biman needeed the government guarantee without which Boeing would not convince any commercial lender to pay the bill before the aircraft delivery.
Biman got hard-term loans of $277 million from JP Morgan to clear the payment during the first two aircraft delivery in 2011, they added.
Beoing had earlier lobbied the finance ministry on a number of occasions for the sovereign guarantee but failed to convince the ministry.
The finance ministry officials said that Muhith had a meeting on hard-term loan committee members in early July and decided not to issue any guarantee for credit to Biman, which incurred Tk 10 billion losses in the 2011–12 financial year.
It annual looses in the past financial year stood at Tk 1.9 billion and in the 2009–2010 financial year at Tk 410 million.
Mismanagement and inefficiency are attributed for the growing losses of Biman, which spent almost a half of its 40-year of existence making losses.
The civil aviation and tourism minister, Faruk Khan, said that fuel price increase on the international market was another reason for Biman’s staggering losses.
Biman has 12 planes in its fleet, 10 of which are 25 years old. The authorities need to spend a whole lot of money on keeping the old planes fit for flying.
It has failed to maintain flight schedules, which discouraged passengers, he said.
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