Georgian Airways loses 25 million US dollars as national currency continues to fall

Georgia’s national flag carrier Georgian Airways has announced that tit has lost close to 25 million US dollars of revenue since Russia banned all Georgian flights to and from Russia on July 8.

“Suspension of the direct air service between Georgia and Russia dealt a material blow to Georgian Airways and put it into a challenging financial position. The airline had to return about 80 per cent of tickets already sold. Furthermore, the number of individuals desirous of buying tickets declined dramatically,” the company’s officials said in a statement.

Responding to the Georgian government’s initiative to subsidise flights to Georgia through Yerevan, Armenia, the company’s management said it was Georgian Airways that asked for the help of the government “to provide financial aid to the company in a challenging situation,”

On July 28, Georgian MPs from the opposition United National Movement and the European Georgia parties both slammed the government’s plan to subsidise flights through Yerevan, saying the move sends the wrong political signal and further maintains Georgia’s economic dependence on Russia.

Meantime, Georgia’s national currency, the lari (GEL) continued to lose value against the euro and the US dollar, with Georgian commercial banks now selling one USD for three GEL.

“Today, Georgia is going through an external shock [affecting the GEL],” president of the National Bank of Georgia Koba Gvenetadze told the local press on July 30, adding that the central bank will intervene if the exchange rates have an effect on inflation.

Russian president Vladimir Putin introduced a flight ban to and from Georgia following protests in Tbilisi against Russia’s occupation of Georgia’s two breakaway territories, Abkhazia and Tskhinvali (South Ossetia).