Nigeria’s $85m debt to Emirates ground its operations, forces airline to cut down its flights Lagos, Abuja

Per Second NewsJuly 30, 2022244

With Nigeria blocking the repatriation of its $85 million to Dubai, Emirates says the withheld funds has grounded its operations in Nigeria. To this end, Emirates has been forced to reduce its flights from Dubai to Lagos from 11 per week to seven per week and five to Abuja effective from August 15, 2022.

Persecondnews had reported in June that cumulatively, Nigeria is withholding $450 million in payments due to foreign airlines, the biggest amount held by any single African country, and the amount is rising every week, according to International Air transport Association (IATA).

In a letter to the Minister of Aviation, Sen. Hadi Sirika and dated July 22, 2022, a copy of which was obtained by Persecondnews, Emirates said: “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.

It is with a heavy heart that I write to inform you of planned reductions in Emirates’ operations to Nigeria.

With effect from 15August 2022, Emirates will be forced to reduce flights from Dubai Dubai to Lagos from 11 per week to 7 per week.

As of July 2022, Emirates has USS 85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than $US 10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate.

These funds are urgently needed to meet our 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. Emirates did try to stem the losses by proposing to pay for fuel in Nigeria in Naira, which would have at least reduced one element of our ongoing costs.

However, this 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.

Emirates regretted that efforts to get the Central Bank of Nigeria (CBN) to find a solution to the issue were unsuccessful.

Our Senior Vice-President met with the Deputy Governor or 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.

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.

Meetings were also held with Emirates’ own bank in Nigeria and in collaboration with IATA to discuss improving FX allocation but with limited success.

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,’’ Emirates stated.

Persecondnews also recalls that IATA, the global airlines’ lobby group has held two rounds of discussions with the Nigerian government, including the Central Bank of Nigeria to help to negotiate the release of funds owed to foreign airlines operating in the country.

Mr Kamil Al Awadhi, IATA’s Vice- President for Africa and Middle East, said: “The excuse was that ‘we don’t have hard cash and this is why we can’t do it’ but you have to note that Nigeria is the biggest economy in Africa and Nigeria is the No 10 country in the world that exports oil”.

While I was in that meeting with the central bank, they were not responsive to handling the blocked funds and almost said, ‘well, tell the airlines not to operate’ and this is of course extremely damaging to the aviation industry inside Nigeria and internationally.”

Mr Al Awadhi had said he would be returning to Nigeria “soon” for a third round of discussions to reduce the backlog.

Airlines are owed $1.6 billion from Nigeria and 19 other countries as governments seek to retain hard currency, depriving the aviation industry of cash.