Monday, May 21, 2007

Biman's Problems Are Much Deeper...

Like this editorial in The Daily Star, I, too, question the caretaker government’s wisdom in turning Biman Bangladesh, the nation’s moribund flag carrier, into a public limited company (PLC). It’s not an elixir or a magic pill; it won’t make Biman any more viable: in fact it will still be the same debt-ridden, over-extended, over-staffed, and poorly-serviced airline everyone is use to seeing.

The crux of Biman’s problems is a bad business model and poor management. Much of Biman’s problem can be placed at the feet of every government that used it like a political fiefdom, doling out positions to party loyalists. The challenge to right-size Biman is immense: first, staff must be trimmed; second, all outstanding debts must be paid off, or renegotiated at more generous terms; third, new aircraft needs to be ordered; and fourth, a new business plan needs to be formulated and a dynamic management team to implement it. It’s a tall order that requires millions of dollars in additional capital and a lot of patience.

Unless these structural problems are addressed first, with the additional promise of no political interference from this and future governments, turning Biman into a PLC is a pointless exercise.