After Boeing Deal, Biman Faces Tk 11,000 Cr Financing Pressure
Representational Image. Collected.
Following the signing of a contract with US-based Boeing to acquire 14 aircraft, securing financing has emerged as the biggest challenge for Biman Bangladesh Airlines.
The airline is exploring international loan assistance to arrange approximately $965.65 million (around Tk 11,600 crore) for the pre-delivery payments (PDP).
On April 30, Biman signed an agreement with Boeing to purchase eight 787-10, two 787-9, and four 737-8 aircraft. As part of the deal, 1% of the total price was required as signing money, of which 0.5% was paid on May 5. The remaining 0.5% is to be paid by December of this year. In total, Biman will need to pay about Tk 45,000 crore to acquire these aircraft.
Immediately after the contract, Biman formed a high-level "Financing Committee" on May 7 to determine the financing strategy. This committee is working to finalize the financing framework in coordination with domestic and foreign banks. According to Biman's calculations, before the deliveries begin in November 2027, the airline must make phased pre-delivery payments (PDP) totaling $965.65 million (approximately Tk 11,600 crore), divided into 98 installments.
To secure this financing, Biman sent a formal letter on June 1 to David R. Fure, Vice President of the US Export-Import Bank (US EXIM). The letter seeks information on possible support percentages for either long-term or four-year stand-alone PDP financing structures, exposure fees, repayment schedules for principal and interest, and the likely timeline for final approval.
Obtaining a sovereign guarantee from the government is also considered a crucial condition. To this end, Biman has developed a potential internal workflow of approximately 15 steps, including policy approval from the Ministry of Finance, vetting by the Ministry of Law, and clearance from the relevant committee of the Economic Relations Division (ERD).
Stakeholders say managing foreign debt of this magnitude makes interest rates, currency exchange rates, and long-term liabilities critical factors. Additionally, Biman has announced initiatives to implement the Cape Town Convention and Aircraft Protocol following international standards to reduce future aircraft financing costs. Coordination with the Civil Aviation Authority of Bangladesh (CAAB) and relevant ministries is also planned.
Regarding the matter, a director of Biman Bangladesh Airlines told Agamir Somoy: "Fleet expansion is part of Biman's long-term strategic plan. We are treating the financing issue with the utmost importance, and discussions with international financial institutions are ongoing. We will take the next steps only after ensuring a sustainable and cost-effective financing framework considering all aspects."
Aviation analyst Wahidul Alam said, "The main challenge now is not securing financing after the contract signing. What’s important is ensuring the proper and efficient use of the aircraft and controlling systemic losses or wastage; otherwise, financial pressure could build up."
"How professionally the overall management is conducted is also important. Our challenge is that proper utilization is often not ensured; due to weaknesses in management and a lack of continuity at the policy-making level, achieving desired results becomes difficult," Wahidul Alam added.
