Iraq cabinet steps in to resolve Kuwait Airline dispute

Iraq's Cabinet agreed to allocate $500 million from the budget to resolve a dispute with Kuwait over the debts of Iraqi Airways, reports Bloomberg.
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State-run Kuwait Airways Corp. has been seeking $1.2 billion in compensation for 10 aircraft taken during former Iraqi President Saddam Hussein’s invasion of Kuwait in 1990. 

Prime Minister Nouri al-Maliki agreed to pay $300 million in compensation to the carrier and another $200 million to establish a joint airline with Kuwait, which will contribute a similar amount. 

Analyst Saj Ahmad commented: "Kuwait Airways will likely be as pleased as the Iraqi Government is to draw a line in the sane behind this long running saga of compensation emanating from the Gulf War. To that end, the approval by the Iraqi Government to pay $500m in damages as well as set up a joint Kuwait-Iraqi airline will be seen with a sigh of relief on all sides. 

“Of course, the other damages that the Kuwaiti Government seeks from Iraq is not included here but at least now, Iraqi Airways can start to finalise its plans to take delivery of its 787-8s and 737s that it has on order. Iraq has seen a massive burst of traffic come into the country as well as Arab rival airlines freely plying their trade with no domestic threat from Iraqi Airways.”

Ahmad concluded: “Now that this agreement between the two nations is in place, there will be greater emphasis on Iraqi Airways redeveloping itself so that it can capture market share that it has lost to other carriers. It won't be an easy task, but it's one they have to address sooner rather than later."

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