Good News for Naira as Nigeria Finally Pays Off Debt to Airlines, 2% Remaining

• The International Air Transport Association confirmed 98% of airlines have been paid by Nigeria
• The remaining $19 million is yet to be paid because the Commercial Banks' forward claims are still being verified by the CBN
• The IATA director said the amount owed at the end of April 2024 had declined to around $1.8 billion

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Nigeria has paid 98% of the airlines that have monies stuck in the nation and has requested the final clearance of the remaining 2%, the International Air Transport Association (IATA).

According to IATA Director General Willie Walsh in a This Day report, the amount of airline funds that governments are preventing from being repatriated has decreased overall by 28%

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He estimated that the entire amount of blocked money at the end of April 2024 was around $1.8 billion, a decrease of $708 million (or 28%) from December 2023.

Walsh commended the remarkable progress made in the country. At its height in June 2023, Nigeria's blocked funds totaled $850 million, which had a substantial impact on airline operations and finances in the nation.

He said that the aviation industry in Nigeria suffered greatly as a result of carriers' inability to repatriate earnings in US dollars and the large amount of frozen cash that forced several airlines to cut back on operations and one to briefly halt operations altogether.

However, 98% of these money had been cleared as of April 2024. The Central Bank is still verifying outstanding forward claims that the commercial banks have filed, which is why the additional $19 million was found.

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“We commend the new Nigerian government and the Central Bank of Nigeria (CBN) for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical. We are on the right path and urge the government to clear the residual $19 million and continue prioritising aviation,”

said Walsh.

IATA wants FG to remove obstacle

Nonetheless, in compliance with international agreements and treaty responsibilities, IATA has emphasized the need for governments to remove all obstacles that prevent airlines from repatriating their earnings from ticket sales and other operations.

“The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements.

“Even more importantly, it is a pre-requisite for airlines—who operate on thin margins—to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,”

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Walsh added.

He stated that the primary cause of the decline was a noteworthy release of monies that were blocked in Nigeria. Its substantial accumulation of frozen funds was also approved by Egypt, he emphasized.

But in both instances, he regretted, the depreciation of the Nigerian Naira and the Egyptian Pound had a negative impact on airlines.

According to IATA, eight nations were responsible for 87% of the $1.6 billion in blocked cash overall.

Airlines had their safest year in 2023

Legit.ng reported that last year, 2023 was the safest ever for commercial air travel, despite a massive rebound in passenger flights, an airline industry group has said.

Last year was the safest ever for commercial air travel, despite a massive rebound in passenger flights, an airline industry group said Wednesday.

The only fatal accident of a passenger plane was the crash of an ATR turboprop operated by Nepal's Yeti Airlines during a domestic flight, killing 72 people, according to the International Air Transport Association's (IATA) annual report.

Source: Legit.ng