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Airlines booked significant losses in currency depreciation, despite Nigeria and Egypt wiping the slate clean by paying off the bulk of the money they owed airlines in blocked funds.
This hugely impacted small African airlines that often operate from a high-cost base, as they had to write off a big percentage of assumed revenues from sales in Nigeria and other African countries.
In one extreme case, one airline lost as much as 60 percent of accumulated funds to currency depreciation, industry sources revealed. The International Air Transport Association (IATA) on June 2 released its latest report on blocked funds, indicating a 28 percent reduction in the amount of airline revenues blocked from repatriation by governments around the world.
As at the end of April, the bill of blocked funds had dropped to US$1,8 billion, from just over US$2,5 billion at the end of December 2023. Most of the gains came from Nigeria paying off 98 percent of the hundreds of millions of dollars it owed, with only US$19 million left pending in the system at the end of April. In June 2023, Nigeria owed airlines US$850 million. IATA says even the remaining US$19 million is due to the Central Bank of Nigeria’s ongoing verification of outstanding forward claims filed by the commercial banks.
Egypt, which also owed huge amounts, has cleared a big portion of accumulated airline funds.
“However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira,” IATA says.
Following progress in Nigeria, Emirates, which suspended all services to the country in August 2022, has announced it will be reinstating flights starting October 2024.
“We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. — The East African
Online Reporter