IATA seeks meeting with Venezuela president over money owed to airlines
Source: Reuters
(Reuters) - A leading air transport industry body has called for a top-level meeting with the Venezuelan president to discuss ways to restore over $4 billion of airlines' money that is trapped in the country due to its currency controls.
President Nicolas Maduro's government requires airlines to sell tickets in the bolivar currency but has been slow to allow them to repatriate the earnings.
The International Air Transport Association (IATA), which represents around 240 global airlines, said on Monday that while Venezuela had permitted repatriation of $424 million shared among some airlines, $4.1 billion of airline ticket sales remained trapped in the country.
Unable to repatriate ticket sales, many airlines, such as Delta, American Airlines and Lufthansa have slashed the number of flights they offer, while others such as Alitalia and Air Canada have halted flights altogether.
Read more: http://www.reuters.com/article/2014/07/28/venezuela-airlines-idUSL6N0Q33IL20140728
This is what happens when a country can't pay its bills.
COLGATE4
(14,732 posts)WON'T pay its bills.
candelista
(1,986 posts)It's about keeping up the price of the currency.
Perseus
(4,341 posts)The Venezuelan Government is not paying because when purchases are made they are holding the money, it is not the people who owe the airlines, it is the corrupt Venezuelan government.
Maduro, Cabello, or the Chavez family can most probably write a check from their own coffers, which is filled with stolen money, and pay the airlines.
The airlines can have that money...so long as they spend it in the country. What they can't do is convert it into dollars and take it home and invest it somewhere else.
christx30
(6,241 posts)providing services to their customers. It's their money. They can do whatever they want with it. If you worked at a grocery store, you wouldn't want your entire paycheck to be given to you in the form of store credit.
candelista
(1,986 posts)So the Venezuelan government wants to keep those profits in the country. Comparing this to a salary from a grocery store is like comparing apples and oranges.
christx30
(6,241 posts)from the Venezuelan people. No one forced those people to take flights. Everything was voluntary.
Again, this is money that was earned by the airlines for doing their jobs. If they want to convert it to dollars and invest it overseas, or bury it in peat moss for the next 6 months, I don't care. But it's THEIR money. If Venezuela has a contract to do something, they need to do it.
If a government treated my business like this, I would stop doing business in that country. I would take all of my stuff out of there that's not nailed down, then announce once it couldn't get expropriated.
candelista
(1,986 posts)Just saying.
Igel
(35,309 posts)I mean, we get bent out of shape when a company keeps its profits in another country instead of bringing them back to the US and paying income tax on them. They're unpatriotic, tax-avoiding vampires.
All of those profits kept overseas ... I guess they're "profits extracted" from those countries' citizens and the multinational corporations are doing a good deed by keeping them in those countries.
So rather than being unpatriotic and tax-avoiding, they're being good international citizens.
Maybe we can consider US-earned profits that are shipped overseas "international aid."
It's one or the other.
In the case of the airlines, though, the planes they fly and the back-of-house support that maintains the corporations aren't in Venezuela. They have to pay for those things using income wherever it's earned. It's "profits" in Venezuela because not all the expenses incurred to make those profits are incurred in Venezuela.
And saying that what you make is yours to use isn't libertarianism. Any more than it's up to others to tell you how to use your earned income. I'm using excess income to pay down my mortgage. I'd really object if the government said, "No, you need to spend it on widgets because the widget industry needs a boost from increased demand."
fasttense
(17,301 posts)"It's their money. They can do whatever they want with it."
Money has always had restrictions on its use.
In the feudal economic systems, you could not use your money to buy certain colors, fabric or even foods because they were restricted to Royalty only. Under a king, certain businesses (usually controlled by royalty) had monopolies on certain products such as tea, dyes and herbs. So you could NOT buy these items from anyone else or you would be punished. Under feudalism you could NOT buy transportation out of an area without the king's or lord's approval.
In slavery, you could NOT use your money to buy yourself out of slavery. In some forms of slavery you could not use your money for anything because you were NOT allowed to own anything. But if you were not a slave you could buy a human being. Today, buying people is considered illegal and immoral.
Capitalism is much the same. We restrict the quantities purchased on many things to ensure that only the rich can buy them. Government bonds, facilities and outsourcing services are just a few examples of such restrictions. I can NOT sell my tomatoes to the USDA (who then forces schools and government institutions to use them) because they want thousands of pounds of it all at one time which as a small farmer I can NOT produce. A school can NOT buy tomatoes from me because the government restricts their use of funds. Yet the big factory farms can. We also do not allow money laundering or the purchase of certain drugs, prostitutes and weapons of mass destruction.
The US has ensured that to buy oil you must have dollars. Since the agreements of 1971 and 1973, OPEC oil is exclusively quoted in US dollars. This creates a permanent demand for dollars on the international exchange markets. As of 2005, OPEC continues to trade in US Dollars, but some OPEC members (such as Iran and Venezuela) have been pushing for a switch to the euro. So if you had yens you could not buy oil with them.
Today you and I are limited as individuals from giving more than $2,600 to a candidate http://www.fec.gov/pages/brochures/contriblimits.shtml. Corporations can give as much as they want.
So to blame other countries for placing restrictions on the use of their currency is to pretend you live in a libertarian paradise.
geek tragedy
(68,868 posts)the flights to VN? VN is saying their tickets sales in VN can't be used to cover the costs of airplane parts, maintenance, salaries, insurance, etc. the localized costs of operating flights are very limited.
If the airlines lose money on the flights to/from VN, they will stop flying.
candelista
(1,986 posts)They have to get their parts, maintenance, etc. through Venezuelan companies. That's all.
geek tragedy
(68,868 posts)on an annual basis?
Can one run into Caracas and pick up an Airbus 320?
candelista
(1,986 posts)That way a Venezuelan company--or perhaps the Venezuelan government--will make money. The point is for the profits of the airlines to be spent in Venezuela.
geek tragedy
(68,868 posts)Please do not complain when airlines stop flying there.
candelista
(1,986 posts)What kind of "Democrat" are you?
geek tragedy
(68,868 posts)it should do so.
But, it is a fantasy that foreign companies should be expected to lose money for the privilege of providing air service to Venezuelans.
If the government makes it impossible for them to even break even by flying to VN, then they will simply stop flying to VN.
If VN will demand that the airlines' money stay in VN, well then so will Venezuelans.
candelista
(1,986 posts)Venezuelans will not be stranded.
geek tragedy
(68,868 posts)christx30
(6,241 posts)pay their employees. If the cable company I worked for stopped making profits, I would lose my job.
And having to go through an intermediary to get parts would be a terrible way of doing business. Too much chance for corruption. And it would make things more expensive, because every middle man wants a slice of that pie.
candelista
(1,986 posts)Profits are what is left over after everyone is paid, including management and workers. Profits are the part of company revenue that goes to stockholders.
geek tragedy
(68,868 posts)money in VN while ensuring that VN's people get air service abroad, then it has one option: buy its own airplanes, start its own airline, and pay 100% of the costs of operating the airline and receive 100% of its revenue.
That would be the actual socialist policy.
candelista
(1,986 posts)EX500rider
(10,847 posts)candelista
(1,986 posts)What you (mistakenly) call "gross profit" is actually total revenue. That's the terminology used in the stockmarkets.
EX500rider
(10,847 posts)Gross profit is total sales minus purchases (inventory).
Net profit is gross profit minus expenses.
candelista
(1,986 posts)When I speak of profit what I mean is the money over and above company expenses, including insurance, wages, salaries, money set aside for expansion, etc. I am talking about the money that goes to stockholders. I thought I made that clear from the outset. It is obvious that non profit companies (in this sense) can exist, because they do exist. An none of your mistaken terminological quibbling will change that fact.
Throd
(7,208 posts)What kind of "economist" are you?
candelista
(1,986 posts)Why not?
EX500rider
(10,847 posts)How else do you have money to buy news planes and hire extra people when you need them?
By making a profit.
candelista
(1,986 posts)Profit is what goes to the stockholders. A non profit company can still expand, buy new stuff, hire new employees. I'm surprised you don't know this.
EX500rider
(10,847 posts)A. Not all companies are owned by stockholders. There are private companies and private corporations.
B. If I want to save enough millions to buy 10 new jets 5 years from now I need a profit every year until then.
candelista
(1,986 posts)...after all business expenses are paid. Is that notion so difficult? The points you are making are irrelevant to the issue of whether companies, including airlines, can run on a non-profit basis. Of course they can! Surely you know that.
EX500rider
(10,847 posts)7962
(11,841 posts)Either way, the end result will be the further decline of the most oil rich country in the world. Proving the folly of the "revolution' from the start years ago.
Can you imagine if that was the law in every country? A lot of countries would go right back to 3rd world status
candelista
(1,986 posts)You wouldn't believe it from me. And BTW, I doubt your "prophecy."
7962
(11,841 posts)Chavez was a joke, and Maduro isnt as smart as HE was. That beautiful country will wake up before its too late. Thats my next "prophecy"
candelista
(1,986 posts)hack89
(39,171 posts)because those parts have to be imported, which means they are purchased in dollars on the global market. Unfortunately those companies can't get the dollars they need due to VZ currency policies.
Venezuela can exchange bolivars for euros, yen, etc. to buy foreign goods. Where did you get the idea that they have to go through the US dollar?
EX500rider
(10,847 posts)candelista
(1,986 posts)Airbus makes some fine planes. Russia, too. And I'll bet some company somewhere can make parts for Boeings if Venezuela decides to use them.
You are straining at a gnat.
EX500rider
(10,847 posts)..and no, "some company somewhere" can not make bogus illegal parts for Boeings, that's called counterfeiting.
And no, Russia does not make "some fine planes" when it comes to passenger planes.
Throd
(7,208 posts)I don't even trust knock-off parts for my car.
hack89
(39,171 posts)Especially for US parts for US planes.
Dollars are the international reserve currency. Bolivars can be exchanged for Swiss Francs, euros, etc. And Venezuela does not have to buy US parts for US planes. As any aircraft mechanic will tell you, there are plenty of fine knockoffs available from other countries.
Your points of disagreement keep getting smaller and smaller.
EX500rider
(10,847 posts)No they will tell you no such thing and you will void any and all warranties AND make the plane very dangerous to fly on.
christx30
(6,241 posts)get the bolivars exchanged for francs, pounds, ect, and then go elsewhere and convert them to US dollars. Just one more middleman to go through. Slightly less money, but it's better for the company than relying on a Venezuela based company that doesn't have license to manufacture the part.
7962
(11,841 posts)Last time i heard anyway. And its no dump either.
COLGATE4
(14,732 posts)brooklynite
(94,561 posts)...then the Government could ensure that all of THEIR money was spent with Venezuelan companies, and the airlines could shut down their Venezuela service. Win-Win!
BTW - Travel bans were very popular in the authoritarian State -I- lived in. Should fit right in.
candelista
(1,986 posts)But they might place restrictions on moving money out of the country.
And by the way, if you live in the US, you still live in an authoritarian state, dictated by the 1%.