Biman Bangladesh Airlines: Questions hover over Biman profits

Biman Bangladesh Airlines maintains that they are making a profit. In the 2022-23 fiscal they made a profit of Tk 286.5 million (Tk 28 crore 65 lakh). But questions have arisen whether this national flag flier is actually making a profit or displaying a profit by a juggling of figures. Large debts are not being showed in the organisation's financial statements.

The state of Biman's finances came up in a report of the commercial audit directorate. The report states that Biman's actual financial status is not being depicted. It is the business profits of Biman's subsidiary companies outside of the airline sector that are being used to show that Biman is a profitable organisation. In the 2022-23 fiscal, Biman Bangladesh Airlines made a net loss of Tk 259.1 million (Tk 25 crore 91 lakh) in its main airline business.

The commercial audit directorate's report on Biman's balance sheet, income and expenditure, and profit and loss details over the past five years was submitted on Sunday to the parliamentary committee for public undertakings. The report stated that Biman owed the civil aviation authority huge sums of money for landing charges, boarding charges, leasing, surcharge as well as VAT and taxes on other charges. These liabilities were not shown on the financial statements of the past five years. Had VAT and taxes been paid regularly, the organisation's expenditure would have increased and there would be a change would have been seen in the actual profits. The five-year financial statement also left out the huge amount owed in interest due to delayed payments to Padma Oil Company.

The report said that a review of the financial statement of the past five years reveals that profits were not declared in any year. Yet Biman made a net profit in 2019, 2021 and 2022.

According to concerned sources, Biman Bangladesh Airlines conducts flights to 23 international and 8 domestic destinations. Biman's basic function is to carry passengers and cargo. Biman has certain services outside of this. This includes ground handling and cargo handling at Hazrat Shahjalal International Airport, Biman Flight Catering Centre (BFCC), Biman Poultry Complex (BPC), etc. Biman also has proprietorship in Sabre Travel Network Bangladesh Limited (STNBL). This network provides ticket reservations and other services to various local and international airlines and various local travel agencies. This is not a direct airlines service. But Biman basically uses these sectors to show that it is making a profit.

The report said that even though Biman submitted its audit report for the 2022-23 fiscal, it has not submitted its confidential management report. Concerning the audit report, the commercial audit directorate report states that the net profit shown for this financial year was Tk 286,527,442 (Tk 28 crore 65 lakh 27 thousand 441). This includes a net profit of Tk 22,012,652  (Tk 2 crore 20 lakh 12 thousand 652) from the Biman Poultry Complex and Tk 462, 374,715 (Tk 46 crore 23 lakh 74 thousand 715) from the Biman Flight Catering Centre Tk 484,313,367 (totalling Tk 48 crore 43 lakh 13 thousand 367). But Biman Bangladesh Airlines net losses totalled Tk 250,918,278  (Tk 25 crore 91 lakh 8 thousand 278). That means Biman is showing its profits with the profits made from sectors outside of the airlines business.

The report said that in the 2022-23 financial year Biman Bangladesh's operating income was Tk 95,212,465,573 (Tk 9 thousand 521 crore 24 lakh 65 thousand 573). And operating costs were Tk 78,001,314,967 (Tk 7 thousand 800 crore 13 lakh 14 thousand 967). Of the operating income, ground handling service income totalled Tk 12,077,772,826 (Tk 1 thousand 207 crore 77 lakh 72 thousand 826). This is income outside of the airlines service.

The report went on to state that the Tk 38,656,100,000 (Tk 3 thousand 865 crore 61 lakh) in surcharge and other charges (VAT and Tax) owed to the Civil Aviation Authority of Bangladesh for 2022-23 was not shown as Biman's liability. Huge amounts of outstanding debts owed have not been shown as liability in the financial statement. As payment for fuel was made late in 2022-23 fiscal, interest accumulated to Tk 9,703,384,515 (Tk 970 crore 33 lakh 84 thousand 515). This wasn't shown as Biman's dues either.

The audit directorate said that the dues for employee benefit liability in 2017 stood at Tk 10.75 billion (Tk 1075 crore). In the current fiscal this has also been shown as less. So the dues shown in financial statement are not being depicted accurately.

Speaking to Prothom Alo, Biman Bangladesh Airlines' managing director (MD) Shafiul Azam said an international standard company does Biman's audits. The IATA audit is conducted. Biman is not taking funds from anyone. It is paying salaries and allowances regularly, purchasing the required equipment, and regularly paying the due installments. This would not be possible if the airlines was not making a profit. He said, BFC, BPC, ground handling services are all a part of Biman.

Concerned persons say even though ground handling is not Biman's direct work, it has been doing this work since independence. This is the main sources of Biman's earnings. But the airlines business is running at a loss. Unless the debts and liabilities are shown properly in the accounts, the actual picture will not emerge.

Former member of Biman's board of directors Kazi Wahidul Alam told Prothom Alo, the services or businesses outside of Biman's main business are not absolutely incongruent with Biman. But it must be seen whether the debts and liabilities are being properly shown. The manner in which Biman depicts it profits and losses is not correct. If their dues are shown in the audited balance sheet, then the actually profits and losses will be understood.