Iraqi Airways Liquidated & Awaiting Rebirth

On the 25th of April Iraqi Airways flew from Baghdad to London, marking its first flight to the United Kingdom in 20 years. Rather than this long anticipated flight being a joyous moment for the people of Iraq … the flight was not met with fanfare, but by attorneys for the Kuwaiti Government seeking to seize the aircraft.

Why was the Kuwaiti Government seeking to seize the aircraft … which incidentally was owned by a Swedish aircraft lease company Tor Air, not Iraqi Airways? The lawyers were waiting due to British High Court ruling that the Iraqi Government pay Kuwait US$1.2bil for ten plundered aircraft and stolen assets from Kuwait International Airport (KWI) stemming from the former Saddam Hussein controlled regime’s invasion of Kuwait in 1990.

So why has this legal dispute with Kuwait lead to the ceasing of Iraqi Airways operations today and the liquidation of the airline? Well that answer is somewhat surprisingly simple.

The debt owed to Kuwait is from the Iraqi Government and specifically cites Iraqi Airways, the Government owned airline. If the Iraqi Government dissolves Iraqi Airways, they have the opportunity to reorganize the airline as a private entity.   The reborn Iraqi Airways, with a minor name change (a likely name variant would be Iraq Airways or Iraqi Airlines) and change of ownership would be leave Iraqi Airways (or whatever it is renamed) free and clear from seizure by the Kuwaiti Government, or international courts.

A reestablished Iraqi airline, with an owner other than the Iraqi Government,  would be able to ‘purchase’ the assets of Iraqi Airways, including its route authority and its aircraft on order from Boeing, those having minimal downtime, similar to the transformation of Swissair to Swiss International Air Lines

Swissair ceased to exist and liquidated on March 31st 2002 and Swiss International Air Lines flew its first flight on March 31st 2002.   This is much how I see the transformation of Iraqi Airways into whatever the new airline will be named…but probably not as quick and seamless in execution as the Swiss transition.

While Kuwait can pursue the debt following the dissolving of Iraqi Airways, it would need to pursue the debt through the Iraqi Government, without having the ability to attach the debt to assets of the airline.

Presently Iraqi Airways has firm orders with Boeing for 10 787-870s, with options for 5 more; 30 737-870s, with options for 10 more and six Bombardier CRJ-900ERs, with options for 10 more.   This firm order fleet, in addition to the options, makes for a sizable airline with the potential to create a serious international long haul airline and a substantial regional airline. Additionally, Iraqi Airways had recently been exploring the option or converting some of its Boeing 787 orders to 777s to receive the aircraft earlier than their estimated delivery date of 2019, to begin their long haul operations in the near future.

Given the growth potential for the Iraqi market, and the large number of foreign airlines seeking access to non-stop routes into Iraq, the airline…regardless what it is named or who technically owns it … has a viable chance at not only survival, but also long term sustainability.

I will say this … I hope the Iraqi Airways’ paint scheme is maintained under the new airline, it is a wonderful livery.

Happy Flying!

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