Nigeria owes airlines more than half a billion dollars in outstanding air fares as the oil-price slump depletes reserves of the U.S. 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 Wednesday it’s still “optimistic that a solution will be found.”