Iraq buys a 'dream' fleet

Iraqi Airways will have commercial use of at least nine 787s, with one more meant for presidential use.

The government of Iraq has signed a deal valued at more than US$1 billion (Dh3.67bn) to buy 10 Boeing 787 Dreamliners on behalf of its growing flag carrier, Iraqi Airways. The contract was reported on Boeing's orders and deliveries website this week, although the deal was apparently concluded on December 22.

The transaction follows 18 months of negotiations over the new, wide-bodied, long-haul aircraft after the two parties signed a memorandum of understanding in 2008. "The ministry of finance ordered these aircraft and they are planned to be subleased to Iraqi Airways," said Abir Burhan, a spokesman for the airline. "They are destined to replace our current fleet of leased planes." The aircraft are worth a total of $1.7bn at list prices, but after standard discounts the Iraqi deal is probably worth $1.1bn, said Avitas, a US-based aircraft valuation firm. Boeing officials were unavailable for comment yesterday.

Mr Burhan said he was unable to disclose when it would begin receiving its 787s. The airline, which was grounded from operating international flights during the sanctions of the Saddam Hussein era, began flying again in 2004. It serves regional destinations and the UK with leased Boeing 737s, 757s and Bombardier regional aircraft. In 2008, Iraq made its first post-Saddam purchase of commercial aircraft, signing a deal with Boeing for 30 single-aisle 737s, worth $2.3bn at list prices.

The new 787s will help Iraqi Airways fulfil plans to serve the world capitals, and it is believed that the airline will have commercial use of nine of the planes, with one other designated for presidential use. "By committing to the revolutionary 787, the government of Iraq is investing in airline infrastructure that will eventually support a resurgence in tourist and religious traffic into the country in the years to come," said Saj Ahmad, the chief analyst at the consultancy FBE Aerospace, which is based in London.

"A desire to provide improved air services for both passengers and cargo will be critical for economic development." The airline is involved in a dispute with Kuwait Airways, dating back to Iraq's invasion of Kuwait, over stolen planes and parts and the Kuwaiti carrier has threatened to have Iraqi planes seized in Europe to secure payment of the debt. "Its an ongoing issue," Mr Burhan said. "There are talks on high levels going on right now."

With the country slowly rising from the sectarian turmoil following the Second Gulf War, airlines have been returning to Iraq, attracted by strong demand from Iraqis as well as oil and gas and reconstruction officials. Royal Jordanian, Middle East Airlines, Turkish Airlines, Bahrain Air and Gulf Air have launched regional services into Iraq, while in 2006, Austrian Airlines became the first European carrier to start flights to Iraq's northern city of Erbil, in the Kurdish region.

The airline's parent, Lufthansa, has applied to begin services this summer. The Dreamliner, which will feature the largest amount of lightweight composite materials of any passenger aircraft, is one of the fastest-selling aeroplanes ever, with nearly 900 orders prior to its first delivery. After a slow sales start in the Middle East and worries over production delays, the region is fast becoming a success story for the 787.

Qatar Airways has ordered 30 of the type with another 30 options. Etihad Airways has ordered 35, and has options and purchase rights on another 35, as part of a $9.4bn Boeing order in 2008. The aircraft uses 20 per cent less fuel than current aircraft of comparable size, and provide airlines with up to 45 per cent more cargo capacity. Due to its composite-fibre structure and other design points, the Dreamliner also provides better air-conditioning for passengers, larger windows, more stowage space and improved lighting, Boeing said.