THY struggles to free blocked 50 mln euros from Iran

Türkiye Materials 6 November 2012 09:04 (UTC +04:00)
THY struggles to free blocked 50 mln euros from Iran
THY struggles to free blocked 50 mln euros from Iran
Turkish Airlines (THY) is struggling to collect 50 million euros from Iran, a sum of money that is said to be blocked on account of difficulties in transferring money, a problem seemingly exacerbated by a shortage of foreign currency in sanctions-hit Iran Today`s Zaman reported.

Umut Oran, a deputy chairman in the main opposition Republican People's Party (CHP), brought the issue to the public's attention with a parliamentary question in which he had demanded to know whether Turkey would suffer a loss because Iranian currency is not convertible.

Yet, analysts who spoke to Today's Zaman are of the opinion that 50 million euros is not a big amount in the huge turnover figures in the aviation industry. "Considering the yearly turnovers of aviation companies, 50 million euros is not an amount that is large enough to put a company into financial trouble," Uğur Cebeci, who hosts a TV program titled "Cockpit," told Today's Zaman.

Payments for tickets which THY agencies sell in Iran are deposited into a bank in Iran and some time is needed to transfer this money to Turkey through the Central Bank of Iran. Hamdi Topçu, the chairman of THY, was in Iran in September to meet with the Iranian vice president and officials from the Central Bank of Iran to find a solution to the problem. Talking about the sum of money that THY was due to receive from Iran, Topçu earlier said, "There was some difficulty in transferring this sum of money to the Turkish Central Bank but we overcome that problem, but some problems still persist."

Noting that the problem in transferring money was not only peculiar to THY, and that other Turkish companies doing business with Iran are also experiencing the same problem, Güntay Şimşek, who hosts the TV program "Airport," commented to Today's Zaman that "Iran has financial problems due to sanctions and you can't work with Iran without taking certain risks."

Iran Air, Iran's national airline, has, in recent years, had to decrease the number of its flights to some overseas destinations as it is under the grip of sanctions and cannot renew its fleet. THY is therefore a major airline for the Iranian market, with quite a few Iranians flying not only to Turkey but also to destinations in the US, Canada, Europe and even in some Asian countries, via THY.

And that is one of the reasons why the amount that the company is trying to collect from Iran is fairly big. "Iranian passengers have considerably contributed to the growth that THY has achieved in past years," Hamid Kian, the chairman of the İstanbul-based Association of Iranian Industrialists and Businessmen (İSİAD), told Today's Zaman. A second reason that may have contributed to the figure increasing to as high as 50 million euros may be sales that THY conducted with Iran in the past few years. "Turkey sold Iran an Airbus passenger plane and some spare parts as its neighbor suffers from sanctions," Cebeci said.

In addition, the value of Iran's rial has plummeted in the past year and it could be that one of the problems that the THY chairman was referring to is a demand by Iranians to use the former value of the rial instead of the current devalued one for the payment of THY's money. "Iran wants to pay based on the former value of the rial," Şimşek, who is also a columnist at the Habertürk daily, maintained, while Oran from the CHP had also asked, "Is it true that the money THY is supposed to receive from Iran fell by 40 percent in value due to the exchange difference?"

THY will not write off the money it is due to receive from Iran but it may just take a long time. As Şimşek, who believes that Iran is an important market which THY should not give up on, noted: "Iran would never solve any problem at just one go. Doing business there is quite laborious."

The successful performance of THY, which has the largest destination network in the world with flights to 87 cities, has also drawn worldwide attention. German Chancellor Angela Merkel proposed to Prime Minister Recep Tayyip Erdoğan during his visit to Germany last week that Lufthansa and THY establish joint management, to which Erdoğan agreed.

THY shares on the İstanbul Stock Exchange (İMKB) rose by as much as 5 percent on Monday following talks of a possible merger with German giant rival Lufthansa.