Iraqi Airways dissolved amid claims from Kuwait

Iraq's transport ministry has dissolved the national airline, Iraqi Airways, in the latest twist in a long-running dispute with Kuwait over its assertion that Iraq stole aircraft during the First Gulf War. The dissolution is seen as an attempt to circumvent Kuwait's legal case. Kuwait has demanded US$1.2 billion (Dh4.4bn) in reparations from the airline for the alleged theft of 10 aeroplanes and millions of dollars worth of spare parts during Saddam Hussein's 1990 invasion of Kuwait.

Since the Second Gulf War, Iraqi Airways has undergone an overhaul that includes launching its first international routes in the past year. Meanwhile, Kuwait has sought to freeze the company's assets worldwide. "Iraq's cabinet decided to close Iraqi Airways and announced its bankruptcy because the company doesn't own any aeroplanes and because of the Kuwaiti government's cases raised against the company," Karim al Tamimi, a transport ministry spokesman, told the Associated Press yesterday.

"We hope in the future to replace it by two or three companies to resume its operations." A spokesman for Iraqi Airways said he hoped to announce further details on the status of the flag carrier today. Lawyers for Kuwait Airways denounced the latest move and said it would not deter them from seeking legal redress. "It appears to me to be a sorry reflection of Iraq's attitude to its international commitments that liquidating its own national airline is seen as preferable to addressing those commitments," said Chris Gooding, a lawyer with the Fasken Martineau law firm.

Mr Gooding said the legal responsibility merely would be transferred from Iraqi Airways to the Iraqi government. The Iraqi authorities' "conclusion is entirely false. Any such move will not lead to the dropping of claims", he said. "Kuwait Airways' legal team have been faced with this suicide threat - 'come any closer and I jump' - for years and has full contingency plans in place." On Tuesday, Iraqi Airways said it had cancelled routes to the UK and Sweden after Kuwait tried last month to confiscate the airline's first plane to fly to London in 20 years.

Lawyers working for Kuwait tried to confiscate the aeroplane that made the flight but were foiled when it turned out to have been chartered from a Swedish company and not owned by Iraqi Airways. At the time, Kifah Hassan Jabbar, the director general of Iraqi Airways, had his passport seized in the UK and was forced to stay for more than a week because of the Kuwaiti claims. Mr Jabbar issued a statement on Tuesday about the cancellation of routes in which he criticised Iraq's government as failing to resolve the dispute with Kuwait. Iraq has said in the past that it repeatedly called for talks over the case to solve it in a "friendly way" but that the Kuwaitis did not respond.

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