Iraqi Air Halts CRJ Order, Seeks Boeing or Airbus Jets With Loan

Iraqi Airways plans to halt an order to buy regional jets from Canada’s Bombardier Inc. (BBD/B) in favor of larger planes most likely from Boeing Co. (BA) or Airbus SAS after the government granted it a $300 million interest-free loan.

The carrier is unlikely to convert on option to buy further 90-seat Bombardier CRJ900 planes after taking delivery of six of the type and is seeking bigger jetliners, State Minister Ali Al- Dabbagh said today in a telephone interview from Baghdad.

“There was an option to add four more, but Iraq is not very enthusiastic,” he said. “The technical report for this kind of plane was not very positive in terms of its limited capacity in a country that’s witnessing such growth in aviation activities.”

Iraq’s Ministry of Finance will grant the loan via Rafidain Bank and Rasheed Bank, which are state-owned, with the airline repaying the money over 10 years, according to Dabbagh. The government also agreed in March to pay $300 million to resolve a dispute with Kuwait Airways Corp. over compensation for 10 planes seized when Saddam Hussein’s forces invaded in 1990.

As part of the deal, Kuwait will invest $200 million to establish a joint airline company with Iraqi Airways, which operates to about a dozen airports in the Middle East.

The Iraqi government has told Bombardier that it has postponed delivery of the four remaining regional planes “until further notice,” according to a statement today.

While Boeing and Airbus dominate the single-aisle market with their 737 and A320-series models, the Canadian company is building an airliner of its own, the C-Series, and rival planes are also under development in Russia and China.

To contact the reporter on this story: Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net; Khalid Al-Ansary in Baghdad through the Dubai newsroom at kalansary@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Shaji Mathew at shajimathew@bloomberg.net

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