DBEA55AED16C0C92252A6554BC1553B2 Clicky DBEA55AED16C0C92252A6554BC1553B2 Clicky
June 14, 2024
Care to share?

[UPDATE] – The Airbus deal is, apparently, back on.

Here’s the source of this news. The numbers are odd—two A350-900s for $1bn? The negative cash flow in the deal is not surprising.  This news follows earlier reports Biman was looking at up to ten A350s.

  • Biman will have to pay a total of $900 million for the two aircraft by June 2027, which is 18.6% higher than the base price of $763.75 million offered by Airbus based on 1 January 2023.
    • Of course, prices changed between 2023 and 2027!  The entire market has changed as Airbus’ A350 orderbook has grown.
    • What does the airline suppose a deal on 787s might cost? At least they already operate 777s and 787s.
  • Biman will need to pay a $10 million non-refundable commitment fee upon signing the memorandum of understanding.
    • This is not a shocker.
    • Biman has a reputation. The airline was not a particularly good customer when it signed for three Q400s six years ago. Canadian Commercial Corporation supported the deal.
    • Moreover, last year, Biman was behind on payments to the Civil Aviation Authority of Bangladesh.
    • The airline claims it is profitable, but there are doubts about it.
  • Moreover, in December, there was a report about Biman being cash-constrained and still considering two A350s.
  • Boeing’s offer has been “on the table for months but it is yet to be taken up for evaluation.” sends an awkward signal.
    • Politics, as usual, makes deals messy.
    • The US sanctioning the airline for Iran overflights would stymie any Boeing offer.
    • Head of State actions by France and Bangladesh muddies the waters more.

The non-refundable $10m commitment fee shows how Airbus views this deal. At least that fee would help cover the OEM’s time and effort in the back-and-forth. No media reports offer any details on Boeing’s offer other than types.

This long saga with a state-owned airline leads to the inevitable outcome.  That non-refundable $10m commitment fee is now much easier to understand.

author avatar
Addison Schonland
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.