12:00 AM, January 14, 2012 / LAST MODIFIED: 12:00 AM, January 14, 2012

GMG to cut down flight operations

Plans to downsize workforce, close long routes as cost-cutting measure

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Shariful Islam

The country's first private airlines GMG now plans to cut down its operations and lay off a significant number of workers even though it had earlier predicted business expansion.
As part of its cost-cutting measures, the airlines already closed some of its domestic and international routes, including the Dhaka-Jeddah route since December 16.
GMG's debt of Tk 45.93 crore to the Civil Aviation Authority of Bangladesh (Caab) and Tk 18 crore in travel tax to National Board of Revenue (NBR) as of July last year are a pointers to its poor financial health.
The airlines also delayed some staff salary payments in November last year. The airlines, however, claimed that the delay was due to fund rearrangement of its sister concerns.
A top GMG official requesting anonymity said they have already decided to suspend operation on most of the long-haul routes where Boeing 767-300 Extended Range planes were operating.
The official said GMG will be on more regional routes with new generation aircraft. It has decided to lease out its three Boeing 767 planes.
"We are now going through a transitional period. After realigning our business model, we will follow the proven path for maximising profit with low cost operations through efficient management," said the official, adding, "In the process if we need to cut jobs, we'll do that."
The airlines now has over 1,000 employees. The number was 1,150 earlier but employees started to switch to other airlines jobs fearing they would be axed soon.
“A captain of GMG called me recently and asked for a job,” a top executive of a private airlines, which is planning to start operation soon, told The Daily Star.
GMG earlier operated flights on six international routes but now it does on three, Dhaka-Kolkata, Dhaka-Dubai and Chittagong-Kolkata. Its domestic flights are between Dhaka and Chittagong only.
GMG's fleet has eight planes, three Boeing 767s, three McDonnell Douglas MD-80s and two Bombardier Dash-8s. One MD-80 and one Dash-8 have been grounded for a long time.
Asif Ahmed, director Marketing and Customer Experience, of GMG admitted that GMG is now going through an economic crisis due to rise in fuel cost in the recent months. He said since Biman, the national carrier and GMGs rival, is not imposing rational fuel surcharge on passengers, they cannot do it either.
Asif said they will announce new routes this month.
Asked about downsizing the workforce, he claimed that they were “right sizing” their manpower.
In 2009, Beximco Group got the lion's share of GMG Airlines, which has been operating since 1998. Soon after that, the company organised road shows to get GMG on the stockmarket.
Even though GMG did not go public, it collected around Tk 300 crore from the market in the name of placement of shares. After that GMG submitted prospectus to the Securities and Exchange Commission under bookbuilding method, a way of determining share prices, and Janata Capital and Investment was appointed as issue manager.
Soon after the debacle in the stockmarket in December 2010, the bookbuilding method came under fire, especially for overpricing of securities. Later, the regulator was forced to suspend the method on January 19, 2011. The regulator revived an amended bookbuilding method late last year.

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