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Tuesday, March 11, 2008
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Biman to buy 8 aircraft

Boeing 787-Dreamliner (left); Boeing 777-300ER

Biman Bangladesh Airlines Ltd yesterday unveiled its plan to buy eight new-generation aircraft from Boeing at a cost of $1.265 billion (Tk 8,728 crore).

Of the new eight planes, the first consignment of four Boeing 777-300ER planes, with 463 passenger capacity, will be delivered in 2013 while the four 394-seater Boeing 787-8s (yet to enter service) will be handed over in 2017.

The national flag carrier will also have a facelift, a change of its interior design and exterior looks.

This is the first time Biman independently decided to buy aircraft without any political and government interference after its birth in 1972. Biman became a public limited company in July, 2007.

The price of four Boeing 777-300ERs with General Electric engines will be about $731 million while the four Boeing 787-8s will cost about $531 million.

"Biman will sign a Memorandum of Understanding (MoU) with Boeing [US aircraft maker] here on March 15 to procure the eight aircraft," Chief Adviser's Special Assistant for Civil Aviation Mahbub Jamil yesterday told reporters after Biman board of directors decided on the procurement Sunday during a long meeting.

"Before the arrival of the new aircraft, Biman will have four Boeing aircraft on lease to meet the aircraft shortages and Boeing will provide necessary assistance in this regard," said Mahbub, also chairman of Biman board of directors.

Mahbub said this is the first time in Biman's history that it decided independently to buy aircraft directly from the manufacturing company.

He hoped there will be no more mismanagement in Biman's schedules and it will shape up to be a good company.

Of the four leased planes, the first consignment of two Boeing 777s will arrive next year and another two will arrive in 2010.

Biman currently owns three types of aircraft--four McDonnell Douglas DC10-30s, four Fokker F28s, and three Airbus A310-300s. Production of DC10-30s and F28s ended in the 1980s due to their lack of viability in service.

Out of a total of 11 planes of Biman fleet, only four or five are operating now while the rest are grounded.

Amid aircraft shortages, Biman cut seven international routes and was forced to reduce flight frequencies on five profitable international routes like Riyadh, Jeddah and Kuwait. Biman's market share became almost half it had in 1991.

Mahbub hoped that Biman's negotiating committee will able to reduce the price more through bargaining.

He told reporters that of the two aircraft manufacturing companies--Boeing and Airbus--the offer of Boeing was more lucrative in terms of finance and technical edge.

Biman will pay $1.54 million from its own fund to Boeing while signing the MoU on March 15.

US-based Exim Bank will provide 85 percent of the rest as loan at six percent interest and a consortium comprising different local banks will provide the rest 15 percent of the money as loan. Biman will have to pay up within 12 years.

However, Mahbub said interest rate will be reduced by one percent if Bangladesh ratifies Cape Town convention. He said Bangladesh is going to ratify it soon.

Boeing will also provide advanced training and technical support to Biman pilots. It will assist Bangladesh upgrade the Zia International Airport (ZIA) so that wide-bodied Boeing 777-300 and Boeing 787-8 aircraft can land. It will also help Biman in its marketing.

Replying to a question, Mahbub hoped that Biman would be able to make profits from next year as the public limited company is now at a break-even point.

He said flights on Biman's Dhaka-New York route, now suspended, will resume late this year or early next year.

Biman is likely to procure two more aircraft for short-distance routes. Airbus is to deliver a presentation of their product to Biman soon, after which Biman would decide about the planes.

Meanwhile, Biman employees in a press release yesterday expressed their gratitude to the Biman board for deciding to buy the eight planes. They said Biman's problems will be reduced greatly once those aircraft are drafted into service.

Civil Aviation Secretary Syed Muhammad Zobair, Biman Managing Director and CEO MA Momen, Biman Director of Marketing and Sales AM Mosaddique Ahmed, Director administration SM Mosaddeque Hussain, Member Secretary of Fleet Planning Committee Capt Shah Alam were present at the briefing among others.

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