U.S. Lifts Sanctions On Fly Baghdad, Ending Two-Year Grounding

Fly Baghdad has been removed from the U.S. Specially Designated Nationals list, ending sanctions that grounded the Iraqi carrier for more than two years and clearing the way for it to rebuild its network.

The delisting, published by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) on Aug. 5, took effect immediately.

This means Fly Baghdad and its previously blocked aircraft are no longer subject to U.S. blocking sanctions, and parties worldwide may now resume ordinary commercial dealings with the airline.

OFAC sanctioned Fly Baghdad and then-CEO Basheer Abdulkadhim Alwan al-Shabbani in January 2024 over allegations the carrier provided material support to Iranian-backed militias. The airline denied wrongdoing at the time, while Iraq’s government launched its own investigation. Fly Baghdad suspended all flights in the aftermath.

The airline said the delisting reflects a two-year, companywide compliance overhaul.

“This is the result of two years of disciplined work by our people to rebuild trust in how we operate,” Fly Baghdad CEO Alaulddin Abdulrahman said. “We did not ask for trust—we set out to earn it through governance, controls and transparency that meet the highest international standards.”

Fly Baghdad said it can now resume normal relationships with banks, insurers, lessors, maintenance providers, fuel suppliers and distribution partners, and confirmed ticket sales have restarted.

Founder and Chairman Ahmad Asad said, “When we began this work two years ago, we made one commitment: Fly Baghdad would meet the highest standards of compliance and governance, or it would not fly ... To our banking, leasing, insurance and commercial partners: our doors—and our books—are open.”

The carrier said it is working with aviation authorities and airports to restore its network in a phased manner, with updated routes and schedules to be announced in “the coming days.”

Data shows Fly Baghdad offered 224,048 two-way seats across 1,207 flights on 35 airport pairs in August 2023, five months before sanctions hit. Its August 2026 schedule totals just 8,602 seats on 46 flights across three routes—a 96.2% reduction in both capacity and frequency. Annual capacity fell from 1.92 million seats across 60 airport pairs in 2023 to a single Baghdad-Istanbul route by 2025.

The airline has since added separate routes between Baghdad-Karachi, Pakistan, and Baghdad-Lahore, Pakistan, lifting summer 2026 capacity to 44,506 seats, up 38.2% year over year.

According to current CAPA – Centre for Aviation data, the airline’s fleet consists of five aircraft: a Boeing 737-700, a 737-800 (in service), a 737-900ER (in service), a Bombardier/MHI RJ Aviation CRJ200LR, and a Raytheon Aircraft B1900D.

Fly Baghdad, headquartered at Baghdad International Airport, has operated since 2017.