Dubai-based Emirates has terminated a 10-year management contract at African carrier TAAG Angola after just two years, because of difficulties repatriating Emirates’ own flight revenue from the country.
Emirates signed the non-equity management contract with the Angolan government in September 2014 and a team of executives, led by CEO Peter Hill, were in place at TAAG Angola by summer 2015.
Under Emirates’ leadership, government-owned TAAG’s losses were narrowed from $175 million in 2015 to just $5 million in 2016. Under the plan, TAAG was aiming to be profitable by 2019.
Separately, Emirates operates scheduled flights between Dubai and Luanda, Angola. However, after struggling to repatriate blocked funds, Emirates slimmed back its flights from daily to 5X-weekly.
A source close to the situation said Emirates has now lost patience over the blocked funds issue, cutting its Dubai-Luanda flights to 3X-weekly and canceling the TAAG Angola management contract.
“They just ran out of patience. They gave the Angolan government a lot of opportunities to come up with the funds,” the source said.
Emirates president Tim Clark wrote to Angolan transport minister Auguston da Silva Tomas twice in June to resolve the situation. In a third letter dated July 9, which is circulating on social media in Angola, Clark said the viability of the Dubai-Luanda route is being “severely impacted.”
He informed the transport minister that the service has been cut to 3X-weekly, with immediate effect, adding: “These limited operations will also come under review very quickly if significant progress on the repatriation of our funds is not made in the coming days. I therefore humbly request your Excellency’s urgent intervention with the Reserve Bank of Angola on this matter to protect Emirates’ future services to Angola.
“In light of the prevailing situation, I can confirm that Emirates is no longer able to progress its strategic partnership with TAAG, with immediate effect. Please accept this letter as formal termination of our arrangements in this regard.”
ATW understands that Hill and the management team have already left Angola. The airline is instead being run by deputy chairman Joaquim da Cunha, who was TAAG Angola chairman and CEO before the Emirates contract.
In June 2017, IATA estimated that Angola was holding $340 million in blocked funds. ATW understands that a substantial proportion of this belongs to Emirates.
An Emirates spokesperson told ATW: “Emirates is taking steps to reduce its presence in Angola, because of the protracted difficulties it has been facing in repatriating its sales proceeds. This issue has remained unresolved despite numerous requests made to the relevant authorities, and assurances from them that action will be taken. Therefore, effective 10 July 2017, Emirates will fly 3X-weekly to Luanda, instead of 5X-weekly. In addition, with immediate effect Emirates has terminated its cooperation with TAAG Linhas Aereas De Angola under the management concession agreement entered into in September 2014. We hope that the funds repatriation issue will be resolved as soon as possible, so that commercial operations can resume in line with customer demand.”
TAAG Angola operates a fleet of eight Boeing 777s (five -300s and three -200s), as well as five 737-700s on 11 domestic and 13 international routes.