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Home » Politics: Bangladesh » >Biman set to take on private airlines with 49pc stake sale

>Biman set to take on private airlines with 49pc stake sale

>THE government plans to sell 49 percent of its shareholding in Biman Bangladesh Airlines Ltd this year through stock markets.
The offer, and subsequent listing in the country’s stock exchanges, will help the beleaguered state-owned airline improve its cash flows substantially and take on private carriers, Sohel Parvez reports quoting a top government functionary.

“We will off-load 49 per cent of Biman’s shares to raise funds and improve the cash flow. The public offer will also create a remarkable impact on the stock markets,” Mahbub Jamil, special assistant to Fakhruddin Ahmed, Chief Adviser, in-charge of the Civil Aviation and Tourism Ministry, told The Daily Star today, on the sidelines of a discussion organised by Metropolitan Chamber of Commerce and Industry.
Biman has an authorised capital of Tk 15,000 crore.
The stake-sale announcement comes two weeks after Biman Bangladesh Airlines sealed a deal with US-based Boeing to purchase eight new aircraft for $1.265 billion.
The airline currently has a fleet of dozen aircraft, including four F 28s and three A 310-300s. With an expanded fleet, it hopes to take off and give domestic private carriers serious competition, besides cutting down its own losses, estimated at $ 100 million during 2006-07.

Jamil, who also chairs Biman board, said the shares will be off-loaded through a direct listing process.
“We will try our best to offload the shares within this year,” he said.
In fact, he expects the carrier to break-even in the current financial year itself. The government had corporatised Biman in July 2007, which has now enabled the divestment plan. This will be the first such listing of an airline in the country.
In the last one year, as many as three new domestic private airlines have commenced operations.
The national carrier, which incurred a loss of Tk 455 crore in the fiscal year 2005-06, has narrowed the loss margin by over half to Tk 272 crore last fiscal.
Analysts, however, were not sure if the minority stake sale will help Biman since it continued to be majority owned by the government.
Imran Asif, an aviation industry consultant, said, “This will not help Biman sustain its business in the long run. The management control must go to the private sector if Biman is to be profitable and sustainable,” he said, adding that only a sale of 51 per cent or more will help Biman in the long run. (Click for full story)

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Spectator

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