The Iraqi council of ministers has decided to dissolve Iraqi Airways and liquidate its assets after the airline dropped flights to England and Sweden in a row with Kuwait over war reparations.
Aqeel Kawther, a transportation ministry spokesman, said that the decision was made Tuesday, but implemented Wednesday.
The move came amid pressure from Kuwait, which claims that Iraq stole its fleet of airlines in the 1990 invasion. A British court recently froze the airline's assets at the request of Kuwait Airways Corporation.
Kuwait says that when then-Iraqi leader Saddam Hussein's army invaded the country, they stole about $1.2 billion in aircraft and parts.
The move to dissolve Iraqi Airways came less than a month after Iraq flew its first commercial flight to the United Kingdom in 20 years.
On April 25, the passport of the airline's head Captain Kifah Hassan was seized. He was eventually allowed to return home.
"We were pleased to return Capt Kifah's passport and wish him Godspeed on his way back home. We trust that he will be able to fully comply with the order for disclosure of worldwide assets when back at his desk with all his files to hand and will be fully briefed for his return to England for cross examination," said the law firm Fasken Martineau, that is representing Kuwait Airways Corporation.