RIO DE JANEIRO, Feb 9 (Reuters) - Brazilian airline Gol Linhas Aereas Intelegentes SA, suspended operations to Venezuela’s capital Caracas until it can settle a dispute over the transfer of money out of the country and back to Brazil, the company said in a statement on Tuesday.
The money is being held in Venezuela under the country’s strict currency controls, a system that has led other airlines to take writedowns on Venezuelan operations or suspend ticket sales and service to the country.
Airlines have $3.9 billion of resources trapped in Venezuela, according to the International Air Transport Association, or IATA. The government requires all tickets to be sold in local currency but makes it difficult for the airlines to convert that local revenue into dollars.
The Venezuelan Bolivar though has been shrinking, reducing the foreign currency value of the local ticket sales.
“Gol temporarily suspended its operations in Caracas, Venezuela until the issue of repatriation of company resources in the country is resolved,” the statement said. “Clients affected are being re-booked on other airlines and receiving all necessary assistance.”
Gol gave no estimate as to how long negotiations with the government over the transfers or how long the suspension will last.
Financially strapped Gol has 351 million Brazilian reais ($90 million) trapped in the country according to Exame, a Brazilian newsweekly magazine. It has suffered four years of deep losses exacerbated by falling demand and a strong dollar that has driven up the Brazilian currency cost of dollar-denominated fuel, debt and lease payments.
Gol is 9.5 percent owned by U.S.-based Delta Airlines Inc , a stake made up entirely of non-voting preferred shares.
Venezuela’s currency controls currently disburse dollars for 6.3 bolivars to the dollar for preferential goods such as food and medicine, but also use less advantageous rates including 12 and 200 to the dollar for less important products.
On the black market, U.S. dollars fetch 1,016 bolivars - an 81 percent depreciation from a year ago when dollars sold for 187 bolivars. (Reporting by Jeb Blount, additional reporting by Brian Ellsworth in Caracas; Editing by Lisa Shumaker)