$700m remains blocked, IATA replies CBN over release of airlines’ funds

The International Air Transport Association (IATA) says it is consulting with foreign member airlines operating in Nigeria to verify the release of $136.73 million by the country’s central bank, stating that $700 million remains blocked.

Some foreign airlines have ceased operations in Nigeria over their inability to repatriate their funds.

The situation, which the foreign carriers claim is hurting their operations, has since led to increased airfares, as some companies began charging in dollars for tickets.

The IATA, on March 14, 2023, had said foreign airlines’ revenue blocked from repatriation by the Nigerian government increased to $743 million from $662 million in January 2023.

On January 30, 2024, the Central Bank of Nigeria (CBN) said it released an additional $64.44 million to the concerned foreign aviation firms.

The CBN said the latest disbursement marked the conclusion of the “payment of all verified foreign exchange (FX) claims by airlines”.

The development also portends a potential end to a dispute that began in June 2022 when IATA first raised concern over its members’ $450 million blocked funds.

The CBN had, on January 7, 2024, disbursed $61.64 million to foreign airlines through various commercial banks. Before this, the sum of $265 million was released to the airlines to settle outstanding ticket sales on August 26, 2022.

$700 MILLION REMAINS BLOCKED

Speaking on the bank’s effort to pay airlines, Hakama Sidi-Ali, CBN’s acting director of corporate communications, said the latest amount paid to the airlines brought the “total verified sum disbursed to the sector to $136.73 million”, stressing that all the verified airline claims have now been cleared.

Replying in a statement on Tuesday, IATA welcomed the CBN’s announcement that it has released an additional $64.44 million in blocked airline funds.

The group, however, said it is “consulting with our airline members to verify the release of their revenues, noting that about $700 million remains trapped in the country.

“While this development is encouraging it’s crucial to recognize that approximately $700 million remains blocked with Nigeria’s commercial banks. As such there’s a considerable journey ahead in fully addressing the issue,” IATA said.

“This is exacerbated by the devaluation of the Nigerian Naira, which has dropped significantly against the US Dollar. Airlines should not be unfairly penalized 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.”

IATA is a clearing house for over 300 airlines worldwide, headquartered in Geneva, Switzerland.