Iraq's government has declared state-owned Iraqi Airways bankrupt and decided to liquidate it, seeking a way out of Kuwaiti demands for more than $1 billion in reparations in a dispute that dates back to Saddam Hussein's 1990 invasion of the country. Kuwait's national airline, Kuwait Airways, has long demanded $1.2 billion in reparations from Iraqi Airways for the alleged theft of 10 airplanes and millions of dollars worth of spare parts during the invasion. It has sought to freeze the Iraqi company's assets worldwide. Iraq says the demand is unjust and it should not be held accountable for actions of Saddam's “illegal” regime. The Iraqis stripped billions of dollars worth of Kuwaiti infrastructure and private property until they were driven out by a US-led coalition in 1991. They set fire to Kuwaiti oil fields as they retreated, darkening the skies over Kuwait for months. The Kuwaitis spent $1.5 billion to extinguish the fires. Iraqi government spokesman Ali Al-Dabbagh said the Cabinet had to liquidate the airline to put an end to the Kuwaiti dispute. The government declared the airline bankrupt and decided to dismantle it on Tuesday. “Iraq's Cabinet decided to close Iraqi Airways and announced its bankruptcy because the company doesn't own any airplanes and because of the Kuwaiti government's cases raised against the company,” Transportation Ministry spokesman Karim Al-Tamimi said. The ministry said the company will continue to operate until it is fully liquidated, but it is not known how long. Under Iraqi law, the process of liquidating assets can take no more than three years, the ministry said. The airline's assets make up about 10 percent of what Kuwait is demanding, said the ministry. Al-Tamimi said the airline does not own any planes and the government hopes to replace it with two or three new companies. Iraqi Airways charters planes from other companies to fly to Lebanon, Iran, Dubai, Egypt, Syria, Turkey, Greece and Jordan.
