GMG not paying EUR 15 Mio in dues

Dhaka, Jul 23 ( — An international aircraft leasing firm and Civil Aviation Authority of Bangladesh have filed eight cases against GMG Airlines in connection with around EU 15 million the carrier owes them, reports the Daily Star.

The Civil Aviation Authority of Bangladesh (CAAB) lodged seven suits with lower courts while the Los Angeles-based International Lease Finance Corporation (ILFC) filed one with the High Court.

GMG Airlines, which stopped flying on March 30 last year, owes CAAB EU 13 million in charges such as landing fees, gate fees, navigation, cargo handling, refuelling, and security fees, CAAB officials said.

Of the EUR 13 million, GMG owes Shahjalal International Airport EU 12 million and Shah Amanat International Airport in Chittagong one million Euro.

The ILFC in its case documents said the airline owes it EUR 1.4 million for terminating the lease contract for an aircraft ahead of time.

A top CAAB official said, “We had repeatedly asked the GMG to pay the dues, but the airline did not pay heed to it. So, we had no choice but to seek legal means to realise the money.”

On the EUR 13 million it owes to CAAB, GMG Managing Director Mr. Shahab Sattar said the principal amount was EUR 4.8 million. “The amount the CAAB is showing is surcharge and interest accumulated with the principal amount.”

On the ILFC case, he said they had paid all the dues until the lease deal was terminated in February, 2012, and that GMG even forfeited around $1 million deposited as security money.

“The ILFC’s case is nothing but a breach of contract,” he claimed, adding that at the end of the day the court would look into whether the ILFC leased out the aircraft soon after GMG had returned the plane.

If the ILFC leased out the aircraft to another airline, their claim for damages would be futile, Shahab added.

Sources said GMG had leased a Boeing 767 in 2010 from ILFC for six years. But it informed the ILFC in February 2012 that it wanted to terminate the lease agreement, as it was unable to make the payments.

The ILFC agreed on the termination of the deal only after an assurance from GMG that it would pay the full amount as per the lease agreement. GMG did not pay up, sources said.

Meanwhile, Shahab said they were now seeking to renew the Air Operating Certificate (AOC) so that they could resume commercial operation. “We are trying to reach an agreement with Caab to this effect.”

He hoped the airline’s operation would resume by December this year. “We are in talks with two investors, a Canadian and a Middle-eastern company.”

He, however, did not disclose the investors’ names.

“We have also filed a petition with the High Court against a ministry decision of curtailing 14 frequencies that were given to us,” Shahab added.

An official at GMG claimed that the money they owed to the CAAB had started piling up since 2010 as the operation cost soared.

Industrial conglomerate Beximco Group bought lion’s share of GMG in 2009.

In 2010, the airline raised EUR 30 million through private placement as a primary step to go for the initial public offering (IPO) using the “book building” method. The method uses bidding for fixing the price of shares.

After a share market debacle in January, 2011, the government suspended the “book building” method, thwarting GMG’s plans to go for IPO.

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