The Kuwaiti Ministry of Finance and Kuwait Airways (KU, Kuwait) are coordinating efforts among themselves ahead fo the anticipated disbursement of USD500 million by the Iraqi government-owned Iraqi Airways (IA, Baghdad).

The Iraqi carrier and state were ordered to pay the Kuwaitis a total of USD1.3 billion as restitution for damages incurred during the invasion of Kuwait in 1990.

Kuwait Airways' claim extends to ten aircraft - two B767-200(ER)s, three A300C4s, and five A310-200s - seized by Iraqi forces in August 1990. In September of that year, the Revolutionary Command Council of Iraq adopted a resolution dissolving Kuwait Airways Corporation and transferring all its property worldwide, including the ten aircraft, to Iraqi Airways. In its claim filed against the Iraqi state and the airline in January 1991, Kuwait Airways valued the aircraft at USD630 million. The damages claimed at the trial exceeded USD800 million.

Following repeat attempts by Kuwait to secure payment including asset seizures, the two sides reached an out-of-court settlement in 2012 wherein the Kuwaitis agreed to drop other pending cases against Iraqi Airways in return for the USD500 million disbursement. Under that initial agreement, Iraqi Airways was to pay Kuwait Airways USD300 million in cash with the remaining USD200 million to be converted to equity in Kuwait-Iraq Airways, a joint-venture carrier that has now been called off. As the proposed venture will no longer proceed, the parties have agreed to settle the entire debt in cash.

As such, according to a confidential source who spoke to the Al-Qabas daily paper, the payment of the USD500 million will be made in either a single tranche or two over the coming months.

For its part, Kuwait Airways had attempted to have control over the entire settlement of USD500 million only for the Kuwaiti Fatwa and Legislation Department to reject the request in May. It had argued it could use the funds to settle payments to Airbus (AIB, Toulouse Blagnac) and Boeing (BOE, Washington National) for its incoming fleet of new aircraft.