by Lufthansa Flyer | Jun 2, 2016 | Corporate, Featured, Frankfurt, Industry News, Lufthansa |
Apparently Venezuela is not the only country who doesn’t understand how to play well with others……
According to reliable sources within Lufthansa, it appears that Nigeria is another country where LH is having trouble repatriating ticket revenue due to unreasonable currency regulations. In Nigeria’s, $20 million is held captive there and Lufthansa has no way to bring the revenue out of Nigeria.
It may not be as dramatic as the $100+ million held by Venezuela, but it’s certainly a serious amount. So much so, that according to LH, if the number approaches $30 million over the coming months, LH will be forced to suspend operations to their 3 destinations in Nigeria. Currently LH services Lagos, Abuja (as technical stop), and Port Harcourt daily from Frankfurt.
Based on the information that I’ve read, it looks as though the airline industry as a whole has nearly $600 million stuck in Nigeria with no way to bring the money home to their balance sheets.
Related: Lufthansa Cancels Venezuela Service
Lufthansa owed over $100mm by Venezuela
by Lufthansa Flyer | May 30, 2016 | Featured, Lufthansa, Passenger Experience |
More details have come out on the heels of LH’s announcement on Saturday that it was suspending service to Venezuela next month.
According to LH sources, it appears that Maduro & Co. (the ‘government’ running VZ) owe Lufthansa over $100 million.
The problem with how the Venezuelans want to conduct business is the fact that LH has to charge in Venezuela’s local currency, the Bolivar, when collecting fares. The problem with it is that Venezuela’s currency policy makes it nearly impossible for a company to repatriate revenue. In this case, LH is stuck with holding Bolivars as the Bolivar market collapses and inflation is forecast to reach upward of 500-600% this year.
In essence this makes the Bolivar worth less than the ‘Kleenex’ that you carry in your bag. LH has no way to convert the money to Dollars or Euros in order to salvage what remains of their capital in Venezuela.
It’s because of this plummeting valuation that LH was forced to suspend service since the Bolivars have in essence become worthless. So much so that I expect LH to write off the $100 million and walk away from the disaster brought upon their balance sheet by Venezuela.
by Lufthansa Flyer | May 29, 2016 | Featured, Lufthansa, Route Announcements |
Earlier today, Lufthansa announced that it is suspending flights between Frankfurt and Caracas effective June 18. They cited ‘deteriorating economic conditions’ and ‘currency conversion issues’ for the cancellation. LH also suggested that they have not ruled out re-opening the route once conditions become conducive.
If you are affected by this announcement, please contact your travel agent or call Lufthansa directly for rebooking options or a refund.
RELATED: Lufthansa Owed Over $100 Million By Venezuela
