British Airways may exit Nigerian routes

London / Bloomberg

British Airways is evaluating its routes to Nigeria, adding to aviation-industry pressure on the government as sister carrier Iberia and US competitor United Airlines halt flights to the oil-based market as traffic stutters and currency controls delay access to revenue.
The UK carrier is struggling to repatriate its share of the $575 million that Nigeria currently owes to airlines globally from tickets sold in the West African nation, said Kola Olayinka, country manager for British Airways’ and Iberia’s parent company, IAG SA. Madrid-based Iberia halted flights on May 12 to Lagos, Nigeria’s biggest city, “due to very difficult operating circumstances and dwindling passenger numbers,” he said in an e-mailed
response to questions.
International Air Transport Association Chief Executive Officer Tony Tyler met with Nigerian Vice President Yemi Osinbajo this week, the lobby group said in a statement Wednesday that warned that Lagos could lose its role as a hub to West Africa. United Airlines informed employees recently that it would end flights from the US to Nigeria on June 30 because of a lack of demand and difficulty in collecting payments.
IAG Chief Executive Officer Willie Walsh said last month that Iberia would stop serving Lagos after the low price of oil caused Nigeria’s economy to contract for the first time since 2004 in the first quarter. Limits on dollar repatriation have been imposed by the Nigerian Central Bank as reserves slip to $26.5 billion, the lowest in more than a decade, from more than $30 billion in early 2015.
“Exiting Nigeria is a very big decision” and “not taken lightly” following London-based British Airways’ 80 years of operations in the country, Olayinka said. “I believe very strongly that we will keep evaluating the situation, but I can assure you, BA is very committed to Nigeria.”
The government is assessing the situation while Central Bank governor Godwin Emefiele has suggested a flexible exchange rate regime that would end the naira’s peg to the US dollar, Olayinka said. IAG is awaiting details of the policy “so that we can start the process of rebuilding,” he said.

Nigeria owes airlines
$575 million in fares

Abuja / Bloomberg

Nigeria owes airlines more than half a billion dollars in outstanding air fares as the oil-price slump depletes reserves of the US currency and prompts the government to limit the amount of money that can be moved abroad.
Some $575 million was due to carriers as of March 31, according to the International Air Transport Association, even after the Central Bank of Nigeria released funds to pay off part of the backlog.
Nigerian Vice President Yemi Osinbajo told IATA Chief Executive Officer Tony Tyler this week that airlines must agree “a realistic and achievable payment schedule,” the trade body said. Carriers could begin severing links if the issue isn’t resolved, damaging Lagos’s standing as an aviation hub, IATA said.
The Nigerian economy contracted for the first time since 2004 in the first quarter as the drop in crude prices eroded the value of oil exports. Foreign-currency reserves have slipped to $26.5 billion, the lowest in more a decade, prompting the limits on dollar repatriation.
Carriers including United Airlines, Delta Air Lines Inc. and American Airlines Group Inc. pulled capacity from Venezuela during a similar dispute in 2014 as a 61 percent inflation rate limited the state’s access to dollars. Airlines had the equivalent of $3.9 billion trapped in Venezuelan bolivars, IATA estimated.
British Airways parent IAG SA and Air France-KLM Group said in March they were unable to access ticket proceeds in Egypt as political instability there eroded foreign
exchange reserves, and demand for the Egyptian pound faded.
IATA said it’s still “optimistic that a
solution will be found.”