Foreign Airlines Ridicule CBN Claims To Have Settled All FX Obligations


Foreign Airlines on Thursday debunked the Central Bank of Nigeria’s (CBN) claims that it had paid off all the trapped airlines funds in its possession.

They ridiculed the news through Kingsley Nwokeoma, President, Association of Foreign Airlines and Representatives in Nigeria (AFARN).

The acting Director of Corporate Communications at CBN had on Wednesday disclosed in a statement that the financial regulator recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.

But Thursday, President, Association of Foreign Airlines and Representatives in Nigeria, (AFARN), Kingsley Nwokeoma, insisted that CBN still owed the airlines.

Said Nwokeoma:“If they say they have cleared the trapped funds, they should show us figures. They should tell us how much have been cleared. The last I checked, the status quo still remains the same”.

However, the Managing-Director, Flinchglow Holdings Limited and immediate past President of National Association of Nigeria Travel Agencies (NANTA), Mr. Bankole Bernard, who operates one of the top travel agencies in Nigeria, explained that CBN was correct in insisting that it had cleared the backlog of trapped funds in its coffers.

Bernard said the remaining revenues of the airlines were with the commercial banks; that if they wanted to repatriate the remaining revenues they would have to buy dollars in the Investors and Exporters window.

Explained the former NANTA President: “In the past, foreign airlines will sell their tickets in Naira and go to the CBN to buy dollars and repatriate their earnings, but when President Bola Ahmed Tinubu came in May, he directed that CBN should no more sell dollars; so, everyone should go to the autonomous market to buy. Airlines funds are domiciled with commercial banks. The backlog that CBN paid were the funds with CBN before the new policy was made. The Central bank has paid this money and does not owe foreign airlines any money. The airlines will now settle with the commercial banks where they kept their monies”.

He also disclosed that when the Naira experienced rapid drop against the Dollar, airlines decided that they would not sell their Naira; rather, they kept their revenues in the commercial banks because they were selling at rates that were lower than the depreciation of the Naira.

For example, he said, if they sold economy class ticket for N400, 000, which could be equivalent of $1, 200 at that point in time, by the time they would want to exchange the money to Dollars, that Naira had depreciated and dropped radically below $1, 200; so, they decided to leave their money in Naira.

In reaction, the airlines closed their low inventory tickets and started selling their expensive classes that saw economy ticket rise as high as N3 million to N3.2 million for a six-hour flight.

Said Bernard: “CBN is therefore saying, we have cleared what is in our books. Whatever remains is with commercial banks, go and clear with the commercial banks. The commercial banks are using their money for liquidity and may not get the Dollars to buy and their revenues have amassed to billions of Naira and in reaction, the airlines are not opening their low inventory because their money is still trapped”.

He also noted that there had been relative stability in the exchange rate and that the airlines might choose to sell at this time, reiterating that their revenues were with the commercial banks.

In January when this matter first came up, the International Air Transport Association (IATA) acknowledged that the remaining airlines’ revenues were trapped in the commercial banks.

Stated IATA in the statement it released on January 30, 2024: “The International Air Transport Association (IATA) welcomes the Central Bank of Nigeria’s announcement this afternoon that it has released an additional $64.44 million in blocked airline funds. We are consulting with our airline members to verify the release of their revenues.

“While this development is encouraging it’s crucial to recognise that approximately $700 million remains blocked with Nigeria’s commercial banks. As such there’s a considerable journey ahead in fully addressing the issue. This is exacerbated by the devaluation of the Nigerian Naira, which has dropped significantly against the US Dollar. Airlines should not be unfairly penalised by the lower exchange rate.

“We will continue to monitor the situation closely and work with the government to ensure that the environment remains conducive to ensuring Nigeria’s connectivity to international markets”.

However, IATA representative in Nigeria, Dr Samson Fatokun, Said in a telephone interview that there was really no disagreement with the claim made by CBN but the global body would issue a statement on it next week after it had thoroughly looked at the issues.

Said he: “There is no disagreement with CBN. Anybody who suggested that is not speaking for IATA. We are not against the CBN. Now, we don’t have any position. By early next week we are going to make a statement, but we don’t have position now. We are verifying with our member airlines”.

The top five countries that account for 68.0 percent of blocked funds, it was learnt, include Nigeria ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million) and Lebanon ($141.2 million).

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