United Airlines reconsidering decision to pull out of Lagos following Naira float

Houston, TX June 29 (FxMallam) – As United Airlines prepares for its last scheduled flight from Houston to Lagos, Nigeria on June 29, 2016, rumors reaching Fxmallam.com from internal sources suggest that the Houston based carrier may be reconsidering it’s decision to pull out of the West African Country.

Both Houston and Lagos are key centers for the oil and energy markets.

United Airlines had cited the route’s financial performance as the basis of their decision to exit Africa’s largest market.

However, internal sources revealed the Naira peg has restricted the ability for the company to access it’s funds within the country weighed heavily on the decision to end it’s only African route.

In a memo to employees back on May 27, 2016, United cited poor financial performance and weakness in the energy sector for ending the route.

“After careful analysis, we have decided to exit the IAH-LOS (Houston to Lagos) route and redeploy the Boeing 787 aircraft where it can capture more profitable demand,” United said in its Wednesday memo. “Our last flights will be June 29 (eastbound) and June 30 (westbound); after that, customers can travel to LOS via our Star Alliance partners.”

“The IAH-LOS (Houston to Lagos) route has been under performing financially for several years,” United added. “Because of its importance to key Houston-based customers, we continued to invest in it; however, the recent downturn in the energy sector has caused these customers to spend less on travel.”

Now that the Naira has been floated and the Central Bank of Nigeria (CBN) has indicated through action and words to ensure ample foreign exchange availability, a move that United Airlines management didn’t anticipate, the feeling within the company is that a return to Lagos would be in their best interest.

Timeline

“There is no set timeline. UA was not expecting the Nigerian FG to fix the FX policy so quickly and have committed the 787-8 to TLV (Tel Aviv) so there are no available planes,” the United Source told FxMallam.com.

“Fleet Management and Route planning is working together to find a plane they can use. Maybe a 767-300 or one of the many 787-9s they’re taking delivery of. The problem is that those have too much capacity,” the source continued.

No solution is expected in the near term but look for United Airlines to be back in Lagos, Nigeria within 6 – 18 months.

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