MIAMI — American Airlines has written off $592 million of cash that could not be repatriated from Venezuela, taking a one-time charge on its financial results for the fourth quarter of 2015. The DFW-based carrier, as well as other international airlines serving Venezuela, have struggled to repatriate their revenues collected in Bolivars for more than three years now.

The Venezuelan economy is highly dependent on oil, which comprises 95% of the exports and 25% of the country’s gross domestic product. Since the drop in the oil prices, the economy collapsed, diminishing the value of the Bolivar to almost nothing on the private black market, while the government led by president Nicolas Maduro continues to maintain an official (higher) rate. According to IATA, the outstanding collective sum to be repatriated equals to $3.7 billion at the 2013-2014 official exchange rate (VEB 6.30 = 1 USD).

Reducing the Exposure to Risks

With the mark-to-market write downs, American will have finally reduced its engagement in and financial exposure to Venezuela to a sustainable level. American has already reduced its service to Venezuela, beginning with an 80% reduction in capacity back in 2014 after dropping from 48 flights per week to 10 flights per week and the cancellation of three of its four Venezuelan routes (from Dallas Fort Worth, New York JFK, and San Juan [PR] to Caracas).

In December of 2015, it briefly resumed service to New York JFK with five weekly flights, citing robust demand from New York and Caracas that it could get customers to pay for in dollars. At the moment, American continues to operate flights from New York JFK and Miami to Caracas, as well as from Miami to Maracaibo. Tickets for these flights may be purchased in dollars or other foreign currencies only.

The question for American is whether this issue will be isolated to Venezuela or if it will instead spread to other Latin American nations. Argentina faces similar economic pressures to Venezuela, and the carrier has already stopped selling tickets in Argentine Pesos. The sole difference in the situations is that Argentina gave the airlines sufficient warning, and American was able to minimize the cash that is currently trapped in Argentina. Still, the combination of currency woes and government restrictions on repatriation marks an eerie parallel for the two formerly lucrative Latin American destinations.