The prospect of involuntarily bankruptcy is all too real for many airlines around the world. But the government of Iraq is poised to voluntarily take Iraqi Airways out of business as a way to avoid a 20-year-old legal dispute with Kuwait Airways. Iraq argues that its flag carrier can no longer continue trading while Kuwait Airways continues to pursue damages of up to $1.2 billion in reparation for the destruction and theft of its aircraft and other assets during the 1990 invasion of Kuwait by then Iraqi President Saddam Hussein.
In late April, lawyers acting for Kuwait Airways sought to impound an airliner operated by Iraqi Airways when it landed in London after the resumption of services from Baghdad. The seizure was not permitted because the aircraft in question was leased from a Swedish company. Iraqi Airways’s chief executive was briefly detained in the UK as part of the legal action.
