Boeing offered Biman Bangladesh Airlines to purchase the two aircraft to avert some losses
The US-China trade war brought blessings for the Biman Bangladesh Airlines, as the American aerospace giant Boeing Company has agreed to sell two Dreamliner aircraft at around 55 percent discounted rate to the national carrier.
The fourth largest air transport company of China, Hainan Airlines had ordered the two Dreamliner 787-9 planes from Boeing, but could not continue the payment due to financial crisis since last year.
The business of China's once high-flying conglomerate has been shrinking after the government scrutinised their debt-fuelled expansions and temporarily seized their business. The US-China trade war deepened the company's financial crisis and caused it to default in debt payment.
The Hainan Airlines Group, also known as the HNA, was one of China's most lucrative companies until it began facing liquidity challenges and pressure from the government.
The conglomerate has decided to sell assets worth more than $20 billion, ranging from properties to big shareholdings since 2018. The Chinese group has been selling real estate and shares worldwide.
The company agreed to sell its $8.5 billion stake in the USA, $376 million stake in the UK and additional stakes in other countries. The failure in payment of Hainan also put Boeing in trouble as it already readied the two ordered aircraft for delivery.
The Boeing Company, which also has been going through a crisis since its planes of 737 MAX series were grounded worldwide, offered Biman Bangladesh Airlines to purchase the two aircraft to avert some losses.
Biman then started negotiation and finalise the price at a discounted rate. The board of the national carrier approved the decision to purchase the two aircraft at a meeting on Wednesday.
Md Mokabbir Hossain, managing director and chief executive officer of Biman, confirmed the board's decision to The Business Standard.
"Biman had plans to increase its fleet but the offer from Boeing made the process faster," he said. Mokabbir, however, did not disclose the price of each aircraft.
He said Biman is planning to expand its business by extending the route plan. As part of the plan, the board decided to purchase the two new aircraft that are expected to join the fleet by this December.
The current market price of Boeing 787-9 with 298 seats is around $200 million.
The inclusion of the new aircraft will increase the total number of planes in the Biman fleet to 12. Sonali Bank will finance the purchase and Biman will begin making payments from this month.
Meanwhile, a senior Biman executive on condition of anonymity said, "The high expenditure in the fleet already caused a negative impact on Biman's cash flow as installments of loan payment have gone up.
"Moreover, the national carrier spent around $12 million this year for returning two leased aircraft to EgyptAir."
He added, "The board on Thursday approved the expenditure for returning the two leased aircraft, which had remained grounded for the past two years and caused huge losses to the national carrier.
"The compensation amount for returning the two leased aircraft and purchasing the new ones will affect Biman's profit this year," said the official.