Egypt Reaches Agreement On Foreign Airline Payments

Egypt's civil aviation ministry said the central bank had reached an agreement over payments to foreign airlines who have struggled to repatriate earnings, due to foreign currency shortages.

Import-dependent Egypt has faced a worsening US dollar shortage since the 2011 uprising and subsequent turmoil drove away foreign investors and tourists.

The crash of a Russian airliner over Egypt's Sinai in late October, killing all 224 people aboard, has further hit tourism in the Red Sea, and with it Egypt's dollar earnings.

Last week Air France-KLM said it had been unable to repatriate any earnings since October and was owed more than EGP100 million Egyptian pounds but the civil aviation ministry said that airlines would be paid what they are owed in foreign currency over "the coming period."

Gehad al-Ghazali, an advisor to the tourism minister, also said that the central bank contacted some of them on Wednesday, agreeing in the case of British Airways to transfer 50 percent of funds owed with the rest to come in instalments.

Egypt also agreed to transfer EGP30 million pounds to Air France-KLM, out of a total EGP120 million owed, he added.

"The negotiations are going on with each company separately and the transfers are made using the official dollar exchange rate for today," he told Saudi-owned Al Arabiya television.

Local media had reported that British Airways stopped accepting payment from customers and tour companies in Egyptian pounds due to problems converting payments into hard currency.

BA said in a statement this issue had been resolved. It gave no more details.

"These issues were beyond our control, but we are pleased that this has now been resolved and as of today, customers can book via the trade in local currency, on ba.com, or through our call centre," a spokeswoman said.

Meanwhile Lufthansa thanked the government for resolving the problem without giving details on any payments plan.

"The Lufthansa Group will continue to take all necessary measures to mitigate the effects of the current foreign currency crisis in Africa and the Middle East," a Lufthansa spokesman said.

The Egyptian pound has come under pressure as foreign currency reserves have dropped but the central bank is reluctant to devalue for fear of further fuelling inflation and has rationed dollars available for non-essential imports to give priority instead to food, fuel, medicines and manufacturing components.