UPDATE 1-Foreign airlines cut flights to Abuja as currency crisis deepens

yungcrae

DUBAI/LAGOS Oct 19 (Reuters) – Two international airlines have announced plans to suspend flights to the Nigerian capital Abuja by next month due to falling demand as a currency crisis in Africa’s top economy deepens.

Emirates Airline on Wednesday became the latest to suspend its four times weekly service between Dubai and Abuja starting Oct. 30, a company spokesman said.The decision to stop flights to and from Abuja was made “after a review of the airline’s operations to ensure the best utilisation of its aircraft fleet for its overall business objectives,” the Emirates’ spokesman said.

Domestic and international carriers operating in Nigeria have struggled with the plunge in the local currency that has made their jet fuel bills in dollars ever more expensive and also hurt their profitability as their passengers pay in naira.

Nigeria is facing its first recession in 25-years brought on by low oil prices, which has cut government revenue and created chronic dollar shortages. The situation has seen many firms halt operations and lay off workers, compounding the economic crisis.

On Friday, Kenya Airways said it will suspend some destinations as part of a route restructuring including flights to Abuja from Nov. 15. A spokesman said this reflected demand.

Both Emirates and Kenya Airways will continue to serve Nigeria from the country’s most populous city, Lagos.However, United and Iberia both stopped services to Nigeria earlier this year. Limited access to foreign currency has contributed to some businesses pulling back from Nigeria due to difficulties repatriating income.

The Emirates announcement comes just a day after its President Tim Clark said the airline could reduce the frequency of flights to Africa or cut them altogether because of persistent financial challenges on a continent that has seen steep currency declines.

Emirates, which had already cut its daily flights to Lagos and Abuja to one a day from two, said last month it had started refuelling its daily flight to Abuja in Accra, Ghana.

So far this year, Nigeria’s naira has plunged in value against the U.S. dollar due to the impact of low oil prices and a central bank move in June to scrap a currency peg that overvalued the naira in the hope of attracting investment.

But four months on, the naira keeps falling while investors stay away, leaving the central bank as the main supplier of greenbacks. Many analysts wonder how much further the local currency can fall.

To avert a full blown currency crisis, the central bank on Friday held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies. But result of the auction is yet to be announced.

Source: http://nigerianewsnow.com.ng/2016/10/19/update-1-foreign-airlines-cut-flights-to-abuja-as-currency-crisis-deepens/