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Trapped $85m Funds, Emirates Airlines set to reduce operations in Nigeria

Emirates Airlines says it will reduce the number of flights to Nigeria from August 15 due to its failure to repatriate its revenue from the country.

The airline disclosed this in a letter dated July 22 addressed to Nigeria’s Minister of Aviation, Hadi Sirika, and signed by its DSVP International Affairs, Majid Al Mualla.

“With effect from 15 August 2022, Emirates will be forced to reduce flights from Dubai to Lagos from 11 per week to 7 per week. We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” the letter partly read.

The letter noted that as of July, Emirates had $ 85 million of funds awaiting repatriation from Nigeria. It said the figure has been rising by more than $10 million every month, while operational costs of 11 weekly flights to Lagos and five to Abuja continue to accumulate.

The airline said these funds are urgently needed for them to meet their operational costs and maintain the commercial viability of our services to Nigeria.

“We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post COVID-19 climate,” the airline noted.

According to the Bilateral Air Service Agreements (BASAs) with countries, airline tickets are mostly sold in naira while the airlines would repatriate the funds in dollars through the country’s central bank.

Emirates said it tried to stem the losses by proposing to pay for fuel in Nigeria in Naira, which would have at least reduced one element of its costs, but that the request was denied by the supplier.

“This means that not only are Emirates’ revenues accumulating, we also have to send hard currency into Nigeria to sustain our own operation. Meanwhile our revenues are out of reach and not even earning credit interest,” the airline added.

The airline said, “Your Excellency, this is not a decision we have taken lightly. Indeed, we have made every effort to work with the Central Bank of Nigeria (CBN) to find a solution to this issue.”

It said, “Our Senior Vice-President met with the Deputy Governor of the CBN in May and followed up on the meeting by letter to the Governor himself the following month, however no positive response was received.”

The letter also explained that meetings were also held with Emirates bank in Nigeria and in collaboration with the International Air Transport Association (IATA) to discuss improving Forex allocation, but with limited success.

The ariline requested the government to help resolve the problem. Nigeria is facing a foreign currency crunch with amid low oil revenues and rising demand for dollars. Naira sold for N700 a dollar on Friday at the parallel market, about its worst performance.

“Should there be any positive development in the coming days, we will of course re-evaluate this decision,” the airline noted.

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