Biman gets lifeline from banks
Civil Aviation and Tourism Minister GM Quader, Bangladesh Bank Governor Atiur Rahman and US Ambassador in Bangladesh James F Moriarty pose with the top executives of the banks that provided a $114.49 million syndicated loan for Biman, at a ceremony in Dhaka yesterday. Photo: Triune
Local banks have come up to lend in foreign currency for the first time to the national airline.
For this, 10 banks have inked a $114.49 million (about Tk 791 crore) syndicated loan agreement with Biman Bangladesh Airlines to facilitate pre-delivery payment (PDP) for collecting two new aircraft next year.
The induction of these two into its fleet is part of collecting 10 aircraft at a cost of $1.3 billion from Boeing. The two Boeing 777-300 ER planes are expected to be delivered by October 2011.
Eastern Bank Managing Director and Chief Executive Officer Ali Reza Iftekhar handed over the deal documents to Biman's Managing Director and Chief Executive Officer Muhammad Zakiul Islam at a function in Dhaka yesterday.
Led by Eastern Bank, the other participating banks in the syndication are AB Bank, BRAC Bank, Dhaka Bank, IFIC Bank, Mutual Trust Bank, National Bank, Prime Bank, The City Bank and Premier Bank.
Terming the deal 'a landmark', the bankers pointed out that the loan, arranged through their offshore banking units, would help save as much as $7 million of Biman, which will require repaying the money to the lender banks in a two-year time at an interest below 5 percent.
The move is also seen as an eye-opener for the local entrepreneurs to reduce dependence on foreign banks and financial institutions for such loans.
“It indicates that our banking sector has indeed come of age,” Atiur Rahman, governor of Bangladesh Bank, told the deal handover ceremony at Purbani Hotel.
The central bank chief suggested the national airline raise its overall efficiency, apart from financial governance capability, to make the PDP in time and respond to the confidence shown by the local banks.
Civil Aviation and Tourism Minister GM Quader, US Ambassador James F Moriarty, Chairman of Biman Board Air Marshal Jamal Uddin Ahmed and Chairman of Eastern Bank Mohammad Noor Ali also spoke on the occasion, also attended by representatives from US plane maker Boeing.
Boeing's eight other aircraft are expected to join the Biman fleet in phases in years between 2013 and 2019.
Biman officials said the purchase of these new aircraft would facilitate replacement of its aging planes in phases as well as help improve regularity schedules and ensure timely departure, needed to lure travellers.
“Biman started its operation with only one aircraft. This is for the first time, we're going for big purchase,” said Civil Aviation and Tourism Minister GM Quader.
He said Biman lags behind various global airlines in terms of fleet. To help the national flag carrier represent Bangladesh abroad, the government took the bold decision to support Biman in procuring new aircraft, the minister added.
As per the aircraft purchase venture, Biman has already paid Boeing $11.96 million for buying the planes.
“PDP is the third payment to Boeing after MoU and definitive purchase agreement of down payment. There are many more to follow,” said the chairman of Biman's Board of Directors.
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