Saturday, February 23, 2019 | ePaper
Tk 201 crore loss last year
Biman faces financial crisis
Kazi Zahidul Hasan :
State-owned Biman Bangladesh Airlines has reported Tk 201 crore net loss in the last financial year owing to higher operating costs and stiff competition with its domestic and international peers.
The national flag carrier suffered the loss despite a double-digit growth in passengers and improved revenue earnings.
Officials said, the loss, associated with rising fuel prices and staff salaries, exchange rate fluctuations, aircraft lease and sale of fixed assets, further deepening the financial woes of Biman, which has already been hit hard by due to lack of necessary liquid funds.Â Â Â Â Â Â
Biman's operating expenses rose 14 per cent to Tk 4,750 crore during the last financial year, while it stood at Tk 4,161 crore in the previous year, according to its financial statement for FY 2017-18.
The report said that Biman's operation stayed adverse at the end of FY 2017-18 mainly due to soaring fuel prices throughout the year, decrease of passengers yield and substantial exchange loss with devaluation of local currency against the greenback and introduction of aircraft ACMI lease basis. Â
"The aviation industry, as a whole, remained challenging during the period with increased fuel price as well as intense price competition in key markets with Middle-East airlines, Asia-Pacific Airlines and local domestic airlines," said the report.
When contacted, Biman's Managing Director and CEO A M Mosaddique Ahmed told The New Nation that the organization faced loss last year due to rise in operating cost and other expenses.
He said being a commercial entity Biman often faced loss. But, we are optimistic to make it profitable. "Biman has undertaken a series of initiatives to enhance the economic performance, efficiency and productivity for the long-term health of its business," said A M Mosaddique Ahmed.
Biman's fuel expenses jumped 25 per cent on year-on-year to Tk 1,501 crore in the last financial year as compared to Tk 1,201 in fiscal 2016-17. That means the airline's fuel cost increased by Tk 300 crore during the period under review.
Moreover, it's employee cost stood at Tk 532 crore in the financial year 2017-18 whereas it was Tk 485 crore in 2016-17.Â It also incurred Tk 93 crore loss for currency fluctuation and Tk 71 crore on sales of two Airbus A 310 aircraft and related spares, according to the financial report.
Biman's operating revenue stood at Tk 4,873 crore in the financial year 2017-18, while it was Tk 4,505 crore in the previous year, showing a 6.20 per cent year-on-year growth, according to the Biman's financial report.Â
The overall growth of revenue was positively impacted due to growth in domestic and international markets and lifting on cargo embargo to London market and substantial increase in revenue from ground and cargo handling operations.
Biman earned Tk 3,330 as passenger revenue, Tk 245 crore as cargo revenue and earned Tk 54 crore from excess baggage and Tk 1157 from others. Non-transport revenue increased by 30 per cent and stood at Tk 1126.77 crore.Â Â Â
Â "It is worrying that Biman posted the loss after making constant profit for last few years. High operating cost is mainly responsible for the loss, which affects the long-term financial health and sustainability of the airline. It should take comprehending cost cutting measures to make its operation sustainable," said aviation expert Kazi Wahidul Alam.
Biman recorded an operating profit of Tk 123 crore in the financial year 2016-17.
Kazi Wahidul Alam observed that the national flag carrier has been lagging its peers on almost all parameters like growth, profitability or market share due to proper planning and operational inefficiency.
During the 2017-18 financial year, Biman recoded 11 per cent passenger growth against the enhanced capacity of 5.0 per cent.
However, passengers yield gone down by 7.0 per cent during the period amid stiff competition from domestic airlines and competition with the fifth freedom fare of the middle-east carriers.
The national flag carrier had flown 26.11 lakh passengers (international, domestic and hajj) during the financial year 2017-18 compared with 23.51 lakh during the previous year.
Biman carried 64,333 hajj passengers last financial year with gross revenue earnings of Tk 753 crore.
Biman total liabilities went up Tk 100 crore as non-current liabilities deceased by Tk 1,472 crore and the current liabilities increased by Tk 1,780 and equity decreased by Tk 208 crore due to losses in 2017-18. The equity decreased by 22 per cent to Tk 965 crore on account of the operating loss.
The non-current liabilities decreased mainly due to long-term PDP loan transferred to current liability to be repaid in the FY 18-19 on delivery of 707-8 aircraft by Boeing Company.Â Â Â Â Â
Biman obtained Tk 481 crore government loans for acquiring 3 DC-10 aircraft and VRS paid to employees.
The airline's direct contribution to the national exchequer stood at Tk 493.74 crore during the FY 2017-18, according to the financial statement.