American Airlines Group Inc., the U.S. carrier with the most flights to Latin America, will reduce weekly trips to Venezuela to 10 from 48 because of an unresolved dispute over cash trapped there.
American will drop service between Caracas and New York’s John F. Kennedy International airport, Dallas-Fort Worth and San Juan, Puerto Rico, after July 1, Casey Norton, an airline spokesman, said in an e-mail today. American Airlines had $750 million trapped in Venezuela as of March 31.
At least 11 carriers have cut capacity, sales or routes to Venezuela and Air Canada discontinued service to the country in March. The airlines are hamstrung by Venezuela’s strict currency controls, which prevent them from repatriating earnings from tickets sold in the country without government authorization. As of April, they had the equivalent of $3.9 billion stuck in bolivars, according to the International Air Transport Association.
“We value our business and longstanding relationships with the government,” Norton said. “However, since we are owed a substantial amount and have been unable to reach resolution on the debt, we will significantly reduce our flights to the country.”
Adding to airlines’ problems, the value of revenue trapped in bolivars is being whittled away by the world’s fastest inflation rate and frequent devaluations.
American continues to work with the Venezuelan government on the issue, Norton said. The carrier will continue to fly between Miami and Caracas, and Miami and Maracaibo.
Venezuela last month reached agreements with six airlines, none based in the U.S., to pay dollar debt and said it may devalue the bolivar for ticket purchasers as it worked to normalize flights and prevent airlines from leaving the country.
Flightglobal reported American’s cuts earlier today.
–With assistance from Corina Pons in Caracas.