Biman signs deal to buy 8 Boeings

Biman Bangladesh Airlines Ltd yesterday signed the final deal with US plane-maker Boeing to procure eight new-generation aircraft--four 777-300ER and four 787-8--at a cost of $1.26 billion (Tk 8,728 crore).
The deal includes an option on the purchasing rights of buying four more planes--two 777-300ER and two 787-8.
The same day the national flag carrier also signed a memorandum of understanding (MoU) with the plane-maker to buy two 737-800 aircraft. The MoU also has the option on the purchasing rights of buying two more 737-800.
This is the first time Biman independently decided to buy aircraft without any political and government interference since its birth in 1972. Biman became a public limited company in July last year.
Dr MA Momen, managing director and chief executive officer of Biman, and Glen A Green, regional director, Boeing, signed the definite agreement and MoU.
"In the history of Bangladesh, no single deal this big was made in the past… our past is not that good, rather very poor," Mahbub Jamil, special assistant to the chief adviser for the civil aviation and tourism ministry, said at the signing ceremony at Bangladesh Airlines Training Centre in Kurmitola in the city.
”The deal for eight aircraft from Boeing with the option of four, signing of MoU for two with an option of two -- it's not the end of the game, it's just the beginning," Jamil said.
"For Biman today is an auspicious and historic day, for the country today is a great day."
Of the new eight planes, the first consignment of four 463-seater Boeing 777-300ER will be delivered in 2013, while the four 394-seater Boeing 787-8s (yet to enter service) will be handed over between 2019-2020. Earlier, the delivery was scheduled in 2017.
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 $533 million.
The two 737-800 aircraft will be used to operate in regional route which will be delivered in 2015.
"Before arrival of the new aircraft, Biman will have four Boeing 777 aircraft on lease to meet the aircraft shortage and Boeing will provide necessary assistance in this regard," said Mahbub, also chairman of Biman board of directors.
Of the four leased planes, the first consignment of two aircraft will arrive next year and the other two in 2010.
Biman on March 15 signed an MoU with Boeing to buy eight new-generation aircraft and have already paid $1.54 million from its own fund.
The US-based Exim Bank will provide 85 percent of the rest as loan with 6 percent interest and a consortium comprising different local banks will provide the rest 15 percent as loan, which Biman will have to pay up in 12 years.
Mahbub said this is the first time in Biman's history that it decided independently to buy aircraft directly from the manufacturing company.
Flights on Biman's Dhaka-New York route, now suspended, will resume late this year, he added.
He expressed the hope there will be no more mismanagement in Biman's schedules and it will shape up to be a good company.
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.
Of the 11 planes of Biman fleet, only four or five are now operational, while the rest are grounded.
Amid aircraft shortage, Biman has 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.
Meanwhile, Biman Bangladesh Pilots' Association in a press release yesterday expressed their gratitude to the Biman board for the deal to buy eight new planes.
The pilots said Biman's problems will be reduced greatly once those aircraft are drafted into service.