Caracas - AFP
The Venezuela government has decided to settle a small part of its $4 billion debt with international airlines, many of which have cut back or halted service to the oil-rich South American country. The debt stems from Venezuela's strict exchange rate controls, which require airlines to sell tickets in bolivars on the government promise to reimburse them in dollars at the official rate of 6.3 to the dollar. At least since August, the government has been withholding those payments, as it deals with a deepening foreign currency crunch despite its oil riches. But on Monday, the government made its first moves towards repaying airlines, although at a worse exchange rate, about 10 bolivars to the dollar. It offered to settle a $7 million debt owed since 2012 to Colombia's Avianca airline, at a 30 percent discount, the president of the Venezuelan airlines association, Humberto Figuera, said. Venezuelan authorities also offered to settle its debts with AeroMexico, Insel Air, Tame Ecuador and Aruba at about 10 bolivars to the dollar, he said. Venezuela's total debt with the four companies, which Figuera estimated to be less than $200 million, would be subject to additional discounts, decided on a case by case basis. Transport Minister Hebert Garcia Plaza, for his part, said working groups have been set up with the airlines to agree on higher ticket prices, which would be reimbursed at a rate of 50 bolivars to the dollar after July 1. Since last August, when the unpaid debts to the airlines began to mount, bolivar ticket prices have soared. Figuera said he saw the government's offer to make reduced debt payments as "good news." The authorities "are beginning to make payments so that companies can continue to operate, even though the agreements they reached (with the government) are not being respected." American Airlines reported in the first quarter results that it has $750 million blocked by Venezuela. The Panamanian airline Copa is seeking $487 million in payments, which exceeds its 2013 earnings, and Air France has unpaid debt amounting to 199 million euros ($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 percent.