The United States has lifted sanctions on Iraqi carrier Fly Baghdad, ending more than two years in which the airline and two of its aircraft were locked out of the international financial system. The move clears the way for the carrier, also known as Iraq Express, to rebuild its network and resume ordinary commercial dealings worldwide.
The US Treasury Department's Office of Foreign Assets Control (OFAC) removed Fly Baghdad and two of its Boeing 737s from its Specially Designated Nationals (SDN) list on August 5, 2026. Parties around the world may now once again do business with the airline without exposure to US secondary sanctions.
Fly Baghdad was first designated in January 2024 under US counterterrorism authorities. At the time, the Treasury accused the airline of supporting Iran's Islamic Revolutionary Guard Corps (IRGC) Quds Force by transporting personnel, weapons and money across the Middle East on behalf of the Quds Force and allied militant groups.
A Treasury official said the delisting followed an administrative review and requests submitted by the airline, and that Fly Baghdad had made significant changes to its operations that addressed the conduct behind the original designation. The department did not spell out exactly what those changes were.
Notably, the removal was not comprehensive. The airline's previously identified owner, Basheer Abdulkadhim Alwan al-Shabbani, remains under US sanctions, with his listing now tied directly to the IRGC-Quds Force rather than to Fly Baghdad. A Treasury official stressed that the decision did not signal any softening of US policy toward Iran, the Revolutionary Guard or any entity designated as a terrorist organisation.
For Fly Baghdad, the practical impact is significant. Sanctions had effectively grounded much of the airline's ambitions by cutting it off from dollar-denominated transactions, lessors, insurers and many suppliers. Being on the SDN list makes it extremely difficult for any carrier to lease aircraft, buy parts, arrange insurance or sell tickets through international channels. With the designation removed, the airline can begin to re-engage with the global aviation supply chain.
The case underscores how closely commercial aviation in the region is bound up with geopolitics. A carrier can be pulled out of the international market by a sanctions listing and, just as abruptly, be handed a path back once regulators are satisfied that the underlying concerns have been resolved. For now, Fly Baghdad has cleared the highest hurdle to returning to normal operations, even as scrutiny of individuals connected to the airline continues.
Sources: Aviation Week, AeroTime. Featured image: AI-generated by AviationShop. By Marco Bianchi.
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