Baghdad predicts blue skies ahead for struggling Inshallah Airways

The day wore on, planes landed and took off again, and fretful passengers at Irbil airport began to play a game as they waited and waited for the 45-minute flight south to Baghdad.

"Spot the Iraqi Airways plane. It isn't as easy as it used to be," said Mudhir Mohammed, a businessman, staring at the runway. "I hope it's not that one," said a friend, nodding towards an ageing Boeing 727, where men gathered around the landing gear, shaking their heads.

A harassed-looking woman then appeared in the lounge with bottles of pop and cupcakes. "The plane you see has a technical problem," she said. "Another one will be with you in two hours, inshallah."

The attractive green-and-white livery of Iraqi Airways - once a familiar sight across the Middle East and beyond - has all but vanished. Much of its fleet lies rusting beside runways in Amman, Tehran and Tripoli, to where 15 planes were sent before the 1991 Gulf war.

Decades of war, no-fly zones, sanctions, and mismanagement have taken their toll. The state-owned airline, the oldest in the Middle East, now struggles to meet its modest flight schedule by leasing old planes. And it appears to be taken as read by passengers that whether it flies or not is a caprice of fate.

"Inshallah Airways," said Mudhir as he boarded. "We'll probably get you there eventually." The phrase is available on a T-shirt. Others on the recent flight to Baghdad said the travails of the once-proud flag-carrier mirrored that of their stricken country. "This is a sad symbol of the state of Iraq," said Aqil Jaber, an NGO worker.

Stricken country

But there may be less turbulent times ahead. Iraqi transport officials plan to expand the fleet, add destinations, and spruce up its infrastructure.

Last week, Iraq signed a $5bn (£2.54bn) deal in Baghdad with Boeing and Canadian plane maker Bombardier for 50 new aircraft it hopes will transform the industry. "We are looking at this as a chance to restructure the whole aviation business in Iraq," said Ahmed al-Saadawi, an adviser to the prime minister, Nuri al-Maliki, and head of the office overseeing ports and airports. "The deal is a sign that the new Iraq is finally finding its feet."

He said the state monopoly, which included ground-handling, catering, and cargo, would be streamlined and made competitive. Privatisation is an option. Iraqi Airways employs 3,800 staff. The idea is to move surplus staff to other areas of Iraq's transport infrastructure.

Meanwhile, the first part of the order of 10 Bombardier CRJ900 planes is expected this summer, with the rest spread out over 2008 and 2009. Aircrew and maintenance staff are already being trained in Jordan. The first of 40 next-generation Boeing 737's is due in 2012. Boeing has offered advice and expertise.

Middle Eastern markets appear to justify the optimism. Passenger numbers in the region have soared between 2002 and 2007. And though air traffic is still light compared with North America and Europe, it grew at 18% last year.

Nevertheless, airline analysts believe Iraq will not experience an easy return to a market dominated by well-funded carriers such as Emirates.

"Iraqi Airways is going to have to start almost from scratch, and without a proper plan and continuous effort it will be a monstrous task," said David Kaminsky-Morrow, deputy editor of Air Transport Intelligence, an online civil aviation news service. "Until there can be a sense of normalcy in Iraq ... it will struggle to get back to what it was."

Compensation

As with many other parts of the Iraqi economy, the past could haunt the future. As rumours spread of the impending Boeing deal, lawyers for Kuwait Airways made noises that any new aircraft bought by Iraqi Airways face being impounded to settle a $1bn compensation case brought by the Kuwaiti flag-carrier in the English courts after the Iraqi invasion in 1990. Ten planes belonging to the Kuwaiti carrier were taken by Saddam's troops.

Partly to get around this problem, the purchase of the new Boeings and Bombardiers was made by the Iraqi government, not Iraqi Airways. But Mike McCormick, a transport expert at the US embassy in Baghdad, believes the risks have not diminished: "Iraqi Airways is owned by the state, therefore the government of Iraq has liability for its debts." He said the US had been promoting talks between Iraq and Kuwait. "It is vital this issue is put to rest before the arrival of the new aircraft."

Some said it would be simpler to close Iraqi Airways and start anew. Saadawi, demurred. "I hope that a lot of people will say we want to keep Iraqi Airways as a unifying factor, and that we don't want to let it go. But it doesn't mean we can't have other airlines as well."