Iraq has begun the process of dissolving its national carrier Iraqi Airways.

Though it is not clear how long the process will take, the airline will continue to operate its flights until it is fully shut down, says Adnan Blebil, director general of the Iraqi Civil Aviation Authority who confirmed that the carrier is to be closed.

The Iraqi government made the decision to dissolve the airline following a long-running dispute with Kuwait over war reparations from the 1990s.

The future of $5.5bn worth of aircraft on order is now unclear in light of the carrier’s dissolution. Iraqi Airways is due to take delivery of 65 aircraft including Canada’s Bombardier CRJ and Boeing 737 and 787 aircraft from the US by 2017 (MEED 18:5:10).

A number of options are now being considered.

“When it [Iraqi Airways] gets the aircraft it could lease them to another airline. But it is not decided yet,” says Blebil.

Kuwait says Iraq owes it billions of dollars including $1.2bn related to aircraft and aircraft parts seized during Saddam Hussein’s 1990 invasion of Kuwait.

Iraqi Airways has now stopped flights to the UK and Sweden after the airline’s chief executive Kifah Hassan Jaber had his passport confiscated as he landed at London Heathrow airport on 25 April. Jaber has since returned to Baghdad.

The government now looks likely to establish two or three private companies in the future that will replace Iraqi Airways’ operations.