Dubai: Egypt risks damaging its aviation industry if it continues to block the release of hundreds of millions of dollars owed to foreign airlines, the International Air Transport Association (IATA) has warned.
Egypt owes $250 million (Dh917.5 million) worth of local ticket sales to international airlines, IATA told Gulf News late on Sunday. That is down from the $291 million that owed in June.
IATA said in an emailed statement that it is working with Egyptian authorities “to find a practical solution to release forex (foreign exchange) to airlines in order to avoid any unintended, detrimental effects on the country’s aviation industry.”
IATA, the world’s largest airline group, warned in June that airlines could stop flying to Egypt if they were not able to remit local sales revenue.
Emirates, which operates 17 weekly flights to Cairo, told Gulf News on Monday that is has “agreed with the relevant authorities on a short-term financial scheme for remitting its residual revenues according to a timeline.” It did not provide details of the timeline or say how much it was owed.
Abu Dhabi-based carrier Etihad Airways, which flies 28 times a week to Cairo, declined to comment when asked if it had revenues stuck in Egypt.
Qatar Airways, meanwhile, did not respond to Gulf News query on the same.
Egypt’s economy has struggled since the 2011 popular ouster of long-time president Hosni Mubarak. Tourists and investments, once major sources of foreign currency, have largely avoided the country and in July foreign reserves fell to a 16-month low of $15.5 billion.
“Egypt’s economy is having a severe foreign exchange shortage,” Alp Eke, senior economist at the National Bank of Abu Dhabi, told Gulf News.
A decision to devalue the Egyptian pound by 14 per cent in March and expectations of another devaluation later this year has led to a rush among companies and the public to collect and hang onto foreign currency, he said.
Egypt agreed on August 11 to a $12 billion loan from the International Monetary Fund (IMF) that is expected to ease foreign exchange shortage pressures.