Emirates Reduces Lagos Flight over Inability to Repatriate $85m
Amidst capital control measures implemented to safeguard the naira, the United Arab Emirates national carrier, Emirates Airline, has notified the Aviation Ministry of its plan to slash daily frequencies to Lagos over accumulated stuck funds, now over $85m.
Emirates plans to cut the number of flights to Lagos to seven from 11 by mid-August, the letter said, adding it had $85 million stuck in the country as of July, a figure that had been rising by $10 million per month.
Industry observers say more airlines could follow suit if the central bank, which restricts access to foreign currency to tackle a severe dollar shortage, did not address airlines’ issues.
“We have no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” it said in a letter to aviation Minister Hadi Sirika dated July 22.
Emirates, in an emailed statement, said trouble repatriating funds was impacting its commercial viability in Nigeria and that efforts to solve the problem had been met with limited success. READ: Low FPIs to Ease Capital Flight Pressure in Fixed Income Market if U.S Hikes Rate
Last week, the naira’s black market value versus the dollar dropped to a record low. The central bank said it was worried about the naira’s value. Nigeria, which gets roughly 90% of its foreign exchange from oil, is struggling to produce due to pipeline theft and years of underinvestment.
Amid similar foreign exchange restrictions in 2016, several airlines reduced flights and carriers Iberia and United Airlines stopped flying to Nigeria altogether. The latter re-launched a Nigerian service last year, but Iberia has yet to return.
The International Air Transport Association said in June Nigeria was withholding hundreds of millions in revenue that international carriers operating in the country had earned.
# Emirates Reduces Lagos Flight over Inability to Repatriate $85m