Angola's hefty airlines bill

(iStock)
(iStock)

London - Angola still owes more than $500 million to international airlines including Emirates, Deutsche Lufthansa AG and Air France-KLM, one of many items in the in-tray of new President Joao Lourenco as he tries to revive the economy.

Africa’s second-biggest oil producer is withholding repatriation of the funds amid a persistent shortage of foreign-currency reserves, according to the International Air Transport Association. 

Alexandre de Juniac, the industry body’s chief executive officer, has this week held meetings with Angolan government ministries about how to recover the cash, IATA said in an emailed statement.

Airlines have been struggling to get ticket revenue out of oil dependent countries such as Angola, Nigeria and Egypt after a 2014 collapse in the crude price dried up reserves of dollars, euros and other major currencies.

Emirates said in October 2016 it could scrap flights to some African locations, and followed up on the threat in July when it cut journeys to Luanda, the Angola capital, from Dubai to three a week from five.

The lingering problem is one of a number of headaches for Lourenco, who became president in September after ending the almost four-decade rule of Jose Eduardo dos Santos.

He’s vowed to fight corruption and end state monopolies, and has earned the nickname “relentless remover” after firing two of dos Santos’s children from senior positions at the state oil company and sovereign wealth fund.

Angola has let its currency fall about 18% this year after committing to scrapping a peg to the dollar that’s been in place since April 2016.

Lourenco needs investment from foreign companies, including airlines, as he seeks to revive an economy forecast to expand 1.1% in 2017 from zero the previous year, according to the 2018 budget. That’s the worst performance since the end of a protracted civil war in 2002.

Other airlines waiting for cash are Ethiopian Airlines, South African Airways, Air Namibia and Air Brussels.

Angola’s national bank has pledged “to find a practical solution to release blocked funds”. De Juniac said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.98
(+0.31)
ZAR/GBP
21.21
(+0.19)
ZAR/EUR
19.17
(-0.06)
ZAR/AUD
11.83
(+0.02)
ZAR/JPY
0.16
(+0.30)
Gold
1776.32
(+0.07)
Silver
18.12
(+0.64)
Platinum
818.00
(+1.17)
Brent Crude
42.85
(0.00)
Palladium
1920.99
(+0.30)
All Share
55086.97
(+1.04)
Top 40
50691.20
(+1.02)
Financial 15
10273.56
(+1.22)
Industrial 25
76890.28
(+0.44)
Resource 10
51004.60
(+1.73)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1623 votes
I am taking a hit, but should be able to recover in the next year
23% - 2130 votes
My finances have been devastated
34% - 3191 votes
It's still too early to know what the full effect will be
25% - 2316 votes
Vote