- POSTED: 30 May 2014 06:13
Venezuelan authorities met with international airlines to which the oil-rich country owes more than US$4 billion, after many cut back or halted service.
CARACAS: Venezuelan authorities met on Thursday with international airlines to which the oil-rich country owes more than US$4 billion, after many cut back or halted service.
Caracas will pay out the funds at a discount over a three-year period to Delta, Avianca, Copa, Tap and Air Europa, Venezuelan Airlines Association president Humberto Figuera told AFP.
In certain cases, the discounts exceed 20 per cent of the debt owed to the airlines. Of the total debt, a big chunk - US$3.5 billion - was incurred last year.
The Venezuelan government, which owes US$14 billion to firms importing food products, medicine, industrial supplies and services, has proposed partial payments to each sector.
But many representatives of the sectors have claimed that only some of the announcements were followed by action.
The debt stems from Venezuela's strict exchange rate controls, which require companies to sell products in bolivars on the government promise to reimburse them in dollars.
But since at least August, the government has been withholding those payments as it deals with a deepening foreign currency crunch, despite its oil riches.
If an airline disagrees with the government's debt deal, "it has been said that the airline could file complaints before national jurisdictions," Figuera said.
Figuera said the government is proposing to settle the US$3.5 billion in debt incurred last year.
For 2014, authorities have promised to normalize payments by year's end.
On Monday, Caracas offered to settle a US$7 million debt owed since 2012 to Colombia's Avianca, at a 30 per cent discount, Figuera said.
American Airlines reported in its first quarter results that it has US$750 million blocked by Venezuela. The Panamanian airline Copa is seeking US$487 million in payments, which exceeds its 2013 earnings, and Air France has unpaid debt amounting to 199 million euros (US$271 million).
Over the past several months, Air Canada and Alitalia have suspended their flights to Venezuela and dozens of other airlines have reduced available seats by 15 to 75 per cent.