Image: Peter Haas · CC BY-SA 3.0 · via Wikimedia Commons
US Removes Fly Baghdad and Two Boeing 737s from Terrorism Sanctions List
The US Treasury Department lifted sanctions on Fly Baghdad and its two Boeing 737s after over two years due to major operational changes addressing prior concerns.
The gist
Fly Baghdad wins US sanctions relief after demonstrating major operational reforms, restoring access to US-related aviation services.
In a significant regulatory update, the US Treasury Department has lifted sanctions imposed on the Iraqi airline Fly Baghdad along with two of its Boeing 737 aircraft, ending a sanctions period of more than two years. The airline, also known as Iraq Express, was removed from the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals list on August 5, 2026. This move follows allegations that had linked the carrier to transporting fighters and weapons on behalf of Iran’s Islamic Revolutionary Guard Corps (IRGC) Quds Force and its affiliated militant groups.
The sanctions were initially imposed in January 2024 after the Treasury accused Fly Baghdad of facilitating the movement of personnel, weaponry, and funds across the Middle East in support of the IRGC Quds Force. Specific claims included the airline’s involvement in flying shipments of missiles, rifles, rocket-propelled grenades, and machine guns to Damascus International Airport, which were then distributed to the IRGC-Quds Force and Iran-aligned factions in Syria. Additionally, US officials alleged that the Iraqi militia group Kata’ib Hezbollah exploited Fly Baghdad flights to move fighters, weapons, and money to Syria and Lebanon.
During the October 2023 escalation following Hamas’s attack on Israel, Fly Baghdad was said to have transported hundreds of Iraqi fighters, some aligned with Iranian-backed groups, further intensifying scrutiny of the airline. Despite these allegations, Fly Baghdad has consistently denied any wrongdoing, labeling the sanctions as based on incorrect or unsubstantiated information.
The sanctions fundamentally restricted Fly Baghdad’s business operations with US entities, barring US citizens and companies from engaging in commerce with the airline. Property and financial interests linked to the carrier within US jurisdiction were also blocked. However, recognizing the importance of maintaining civil aviation safety, OFAC granted temporary exemptions in 2024 to allow critical activities such as maintenance, insurance transactions, ground handling, and the orderly termination of existing agreements, including the repossession of leased aircraft.
The two Boeing 737 aircraft removed from the sanctions list carry Iraqi registrations YI-BAF and YI-BAN. These planes had been identified by the Treasury as blocked property under the prior sanctions regime. The Treasury department emphasized that their decision to lift sanctions reflects significant changes made by Fly Baghdad to its operational conduct, thereby addressing the behaviors that had originally triggered the measures.
A Treasury official commented on the decision, clarifying that Fly Baghdad demonstrated major changes sufficient to remove the airline from the Specially Designated Nationals list. Nonetheless, this removal does not imply a broader shift in US policy towards Iran, the IRGC, or the other designated terrorist organizations. The official further explained that the sanctions could be reinstated should the circumstances alter in the future.
Apart from the US sanctions, Fly Baghdad continues to face regulatory restrictions elsewhere. The airline remains banned from operating within the European Union, as it is listed on the EU’s Air Safety List due to serious safety deficiencies detected by European regulators. The most recent update to the EU ban, issued in June 2026, included Fly Baghdad alongside Iraqi Airways and four other carriers, preventing them from conducting any EU flights.
Founded in 2014, Fly Baghdad has established a network of scheduled passenger services primarily connecting Iraq with destinations across the Middle East and broader region. The recent developments with US authorities mark a pivotal moment for the airline’s international operations, potentially easing previous barriers with US companies and partners involved in civil aviation services.
This sanctions relief is particularly impactful for Fly Baghdad’s operational logistics and commercial partnerships, as it restores the airline’s ability to engage with American maintenance, insurance, and leasing firms without legal impediments. The move thus not only affects Fly Baghdad’s geopolitical standing but also directly influences its fleet maintenance and service capabilities tied to US-based suppliers and contractors.
Frequently asked questions
- Why were sanctions originally imposed on Fly Baghdad?
- The US Treasury sanctioned Fly Baghdad in January 2024 for reportedly transporting fighters, weapons, and money for Iran’s IRGC Quds Force and allied groups across the Middle East.
- What led to the lifting of US sanctions on Fly Baghdad?
- The US Treasury lifted sanctions after Fly Baghdad demonstrated major changes to its operations that addressed the conduct responsible for the original sanctions.
- Does the sanctions removal affect Fly Baghdad's operational status in the European Union?
- No, Fly Baghdad remains banned from operating within the EU due to serious safety deficiencies and stays on the EU Air Safety List.
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