Forex Crisis compels suspension of all flight operations to Nigeria −Emirates

*The United Arab Emirates’ flagship airline has blamed the latest decision on the company’s inability to repatriate its Foreign Exchange earnings from Nigeria

Isola Moses | ConsumerConnect

In a move to curb what the leading airline called its ‘continued losses’ in the West African country, Emirates Airlines has disclosed it will suspend all flights to Nigeria effective from September 1, 2022.

ConsumerConnect reports the United Arab Emirates’ (UAE) flag carrier disclosed this development in a statement issued Thursday, August 18.

Emirates has blamed its decision on its inability to repatriate its earnings in Foreign Exchange (Forex) from Nigeria.

Recall a few weeks back,  the airlines had appealed to Hadi Sirika, Honourable Minister for Aviation, to support the repatriation of its revenue said to be $85 million.

However, it is noted that Nigeria is facing a Forex crisis, and this situation has also affected the Naira, the local currency, to depreciate against the US Dollars.

It was also learnt that Sheik Majid Al Mualla, Emirates airline’s Divisional Senior Vice-President (DSVP), International Affairs, in a  letter to the Minister, said that Emirates had planned reductions in its operations in Nigeria from August 15, 2022.

Al Mualla also stated that flights would be reduced from 11 per week to seven per week at the Murtala Muhammed International Airport (MMIA), Lagos.

The letter had noted: “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.

“As of July 2022, Emirates has US$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.”

Company says paucity of funds hinders continued operations in Nigeria

Emirates further emphasised that funds are urgently needed to meet its operational costs and maintain the commercial viability of its services to Nigeria, the airlines said it could not continue to operate at the current level “in the face of mounting losses, especially in the challenging post-COVID-19 climate.”

The company stated: “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 as well 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.

“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.”

It further noted: “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 Airlines urged the Nigerian Government for support to address its financial constraint, said to be a primary issue to the company’s continued operations in the country.