Cash crunch downs United Airways
Flight operation of the United Airways was suspended last evening for an indefinite period, after the private airline's new board failed to come up with plans to keep it afloat.
"Our flight will be suspended indefinitely from this evening onwards," flight operations director of the troubled airline M Elias told a news briefing at its headquarters in Uttara.
Members of the new board, reconstituted on Monday after its founder Tasbirul Ahmed Choudhury was forced to resign, did not come to office for the last three days to guide the carrier out of crisis, he said.
"We had contacted the new board members, but they did not come forward to resolve the crisis.
"We do not have fuel and other logistics necessary to operate. It is not possible to continue the operation," said Elias.
The news briefing was held after heads of all departments of the lone listed airline sat in the evening to discuss the latest situation.
At the briefing, Elias apologised for the impending sufferings for both the domestic and international passengers due to the suspension.
About 4,000 Bangladeshis living in Jeddah in Saudi Arabia had booked their tickets to fly home before the Eid. Now they will not be able to fly with the United Airways, said Elias.
Other passengers who had booked seats for its 16 other domestic and international destinations would also face the same trouble.
An official of the airline said the company required Tk 1 crore daily to keep the operations going. "It is the responsibility of the top brass to arrange the money. If the managing director does not come to the office, who will make the decision and mobilise funds?"
The abrupt suspension of flights of the carrier has made the future of its 1,100 employees as well as its own destiny uncertain.
"We don't know how the employees will get their salaries and bonuses," said Elias.
The crisis at the company surfaced after Tasbirul was forced to quit as chairman.
In the resignation letter he cited personal reasons, but insiders said it resulted from his conflict with other board members, who had long pressed for a change in leadership.
As he quit after seven years at the helm, Mohammed Mahtabur Rahman, a director, was appointed chairman on the same day. Besides, Shahinoor Alam was made acting managing director and Ferdous Imam acting chief executive officer, according to a posting on the Dhaka Stock Exchange website.
Despite the change in leadership, the new bosses could not take any visible step in the last three days to assure investors and shareholders as well as the anxious employees that things are under control.
To make the situation worse, many of the airline's 1,100 employees, including pilots, engineers and ground staff, refused to work under the new board and started abstention from work on Tuesday night.
More than 200 employees also sent letters to the authority seeking release from the company.
Sources said the members of the board were embroiled in internal feuds for several months over the income and expenditure.
But the woes at the airline date back even further.
The trouble deepened in the last two years as profit fell due to high fuel cost since the airline used old aircraft to run flights, and deferred tax.
The airline also raised capital from the share market by issuing rights share. It used the money to buy aircraft, but its financial condition did not improve.
The company also sought immunity from securities laws so it could raise further capital without having to hold mandatory shares.
It also sought government intervention for a turnaround.
The airline owes about Tk 100 crore to the Civil Aviation Authority Bangladesh (Caab) in navigation, over flying and aeronautical and non-aeronautical fees.
The Caab declined to renew the licence of the airlines over the unpaid bills. The civil aviation ministry intervened, and the airline has had its air operator certificate renewed for 10 months in August.
Set up in 2007, the airline now has 11 aircraft -- two Airbus 310-325, five MD-83, three ATR 72 and one DASH-8 100.
It operates domestic flights to Chittagong, Sylhet, Jessore, Cox's Bazar, Barisal, Rajshahi, Saidpur and Ishwardi.
On the international routes, it flies to London, Dubai, Kuala Lumpur, Kathmandu, Kolkata, Jeddah, Bangkok, Muscat and Singapore.
The trouble at the airline also hit its share prices.
Yesterday, its shares, with market capitalisation of Tk 687 crore, were traded at Tk 11.9, down by 1.65 percent.