Emirates Airline, the national carrier of the United Arab Emirates, has informed the Aviation Ministry of its intention to reduce daily frequencies to Lagos due to accumulated stuck funds that total more than $85 million.
If the forex liquidity crisis continues, the airline warned that its 11 weekly flights to Lagos will be cut to seven starting on August 15, 2022. NewsReport learned.
IATA, the clearing house for more than 280 airlines worldwide, earlier issued a warning about the steadily rising amount of unrepatriated funds in Nigeria and other nations.
Findings showed that the stuck funds from accumulated sales of flight tickets in local currencies was more than $800m in November 2021. It was brought down to about $283m as of March this year, but it further increased to $450m in May and is estimated to reach about $600m as of June.
Emirates, in a memo signed by its head of international affairs, Sheikh Majid Al Mualla, said that they had been constrained to slash frequency to mitigate the continued losses of Emirates on account of its funds stranded in Nigeria.
Al Mualla noted that as of July 2022, Emirates had $85m of funds awaiting repatriation from Nigeria. The figure has been rising by more than $10 million every month, as the ongoing operational costs of its 11 weekly flights to Lagos and five to Abuja continued to accumulate.
“We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate,” he stated.
The airline noted that attempts to stem part of the losses were made, by proposing to pay for fuel in Nigeria in local currency, but the request was declined, by the supplier.
“This means that not only are Emirates’ revenues accumulating, we also have to send hard currency into Nigeria to sustain our operation. Meanwhile, our revenues are out of reach, and not even earning credit interest.
“Indeed, we have made every effort to work with the Central Bank of Nigeria (CBN) to find a solution to this issue. Our Senior Vice President met with the Deputy Governor of CBN in May and followed up on the meeting by letter to the Governor himself the following month, however, no positive response was received.
“Despite our considerable efforts, the situation continues to deteriorate. We are now in the unfortunate position of having to cut flights, to mitigate against further losses going forward,” the letter read in part.
President of the National Association of Nigerian Travel Agencies (NANTA), Susan Akporiaye, described the development as a bad omen for the industry and its operators.
Though the problem is not new, Akporiaye noted that NANTA had consistently appealed to the government to prioritise repatriation of airlines’ funds as a going concern.
She added that the current situation presents a real threat to the industry and the continuity of their businesses as travel professionals.