Ethiopian Airlines has suspended all flights to and business activities in Eritrea after authorities in Eritrea blocked the airline's bank accounts, the company said.
In a statement, Ethiopian Airlines CEO Mesfin Tassew said the carrier was told by Eritrean banks that its accounts have been frozen and it can only make deposits but no withdrawals.
"This action means we are unable to withdraw funds from our accounts to cover important operating expenses such as salaries and aircraft costs," Mesfin said.
"While we are disappointed by this decision, we remain open to constructive dialogue with Eritrean authorities to resolve this issue," he added.
The bank account freeze is seen as the latest sign of deteriorating relations between Ethiopia and Eritrea in recent months after a long period of rapprochement following their 1998-2000 border war.
Ethiopian Airlines is the largest aviation group in Africa and a major link between the continent and the world.
