In a startling revelation at the third edition of the AviaCargo Chinet Conference held in Lagos, Ibom Air’s Chief Operating Officer (COO), George Uriesi, laid bare the airline’s ongoing battle with foreign exchange shortages and their crippling impact on the company’s operations.
Uriesi’s candid disclosure shed light on the daunting challenges the Nigerian airline industry faced amidst the country’s volatile forex landscape.
Uriesi painted a grim picture of the situation, stating that airlines are now compelled to purchase dollars at an exorbitant rate of N950 to fulfill their foreign exchange obligations.
One of the most pressing concerns highlighted by Uriesi was the escalating issue of insurance. He emphasized that due to the stringent requirement of insuring aircraft, the airline had been left with no choice but to weather the storm and secure the necessary funds for insurance.
The COO underscored the financial losses incurred by the airline, largely attributed to the fluctuations in the dollar-based components of their transactions. He explained how the procurement of dollars at rates significantly higher than the Central Bank of Nigeria’s (CBN) official rate, which was initially pegged at N400 to a dollar, had eroded the company’s financial stability.
Uriesi lamented that the disparity between the official rate and the prevailing market rate, which had climbed to N680, had taken a substantial toll on Ibom Air’s bottom line.
The recent introduction of a managed float of the naira by the CBN further exacerbated the situation. This policy shift led to a rapid depreciation of the naira, with rates reaching N779 per dollar at the Investors’ and Exporters’ forex window and an even higher N955 at the parallel market.
Folashodun Shonubi, the acting governor of the CBN, acknowledged the scarcity of dollars in the forex market, validating the concerns raised by Uriesi and other industry stakeholders.
Uriesi stressed that the forex challenge had escalated into a chronic issue for the airline, characterizing the current situation as a relentless sprint. He revealed the latest rates at which the airline had procured dollars, indicating an alarming increase.
Recently, the airline had been forced to purchase a dollar for N915, only to find that the platform rate was even higher at N890. He predicted that by the time the airline would secure its funds, the cost would likely surge to N950.
A distressing new trend highlighted by Uriesi involved a delayed and uncertain process of obtaining dollars. He outlined how financial institutions were now demanding cash upfront for future dollar purchases, a practice that has considerably hampered the airline’s liquidity.
Uriesi disclosed that airlines often faced unanticipated demands for additional funds after providing the initial payment, claiming that the price of the dollar had surged beyond expectations.
