(Reuters) - American Airlines Group Inc on Tuesday said it has written off more than half a billion dollars in revenue stuck in Venezuela because of currency controls.
American, the world’s largest airline, said in a regulatory filing it will recognize a $592 million special charge in the just-ended fourth quarter “due to continued lack of repatriations and deterioration of economic conditions in Venezuela.”
The South American country’s socialist government had compelled carriers to sell tickets in bolivars but made reconverting the sales into U.S. dollars difficult. Globally, airlines have around $3.7 billion trapped in Venezuela as a result of its 12-year-old currency control system, the International Air Transport Association said in June.
American also said on Tuesday it continues to expect a pre-tax margin between 12 percent and 14 percent for the fourth quarter, excluding special items. It continues to expect that passenger unit revenue fell between 5 percent and 7 percent in the quarter from a year earlier.
American’s rival, United Continental Holdings Inc, said on Monday its passenger unit revenue may have fallen more than expected in the fourth quarter, raising the possibility of more turbulence for the top U.S. carriers, after months of heightened competition with low-cost rivals and weaker demand from abroad because of the strong dollar.
American said in the filing that it has moved $2.9 billion of tax allowances - generated from years of losses prior to its 2013 merger with US Airways - to its income statement because it expects to be profitable “on a sustained basis.”
Reporting by Jeffrey Dastin in New York; Editing by Paul Simao