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Iraq to Pay Kuwait $500 Million in Few Days to End Air Dispute

Iraq will pay Kuwait Airways Co. $500 million compensation in a few days to settle a debt dispute, allowing Iraqi Airways to start flights to Europe for the first time since 1990, an Iraqi airline official said.

Iraqi Airways will operate flights to the U.K. and Frankfurt by the end of January after state-run Kuwait Airways drops its legal claims against the carrier, Saad al-Khafaji, director general of Iraqi Airways, said in an interview today. The Iraqi airline is also negotiating routes to Kuala Lumpur, he said in Baghdad.

Kuwait in October endorsed by decree a deal reached with neighboring Iraq in July to settle the financial dispute “and stop litigations in this regard,” the state-run KUNA news agency reported at the time.

Kuwait Airways, being prepared for sale, has been seeking $1.2 billion in compensation for 10 aircraft taken during former Iraqi President Saddam Hussein’s invasion of Kuwait in 1990. The Kuwaiti airline won a U.K. court order to freeze the Baghdad- based airline’s global assets on April 25, 2010, the same day an Iraqi Airways flight landed in London for the first time in 20 years.

Iraqi Airways plans to start a three-year program in 2013 to train at least 500 pilots, according to al-Khafaji. The carrier also plans to build the biggest air training and development institute in the region, and awarded a 30.9 billion- dinar ($26.5 million) contract to Romanian and United Arab Emirates companies as part of a joint venture to build the facility, he said. Boeing Co. (BA) will have a stake in the institute, al-Khafaji said, without disclosing the size.

To contact the reporter on this story: Khalid Al-Ansary in Baghdad at kalansary@bloomberg.net

To contact the editors responsible for this story: Inal Ersan at iersan@bloomberg.net; Shaji Mathew at shajimathew@bloomberg.net

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