By Cornelius Rahn and Caroline Alexander
May 28 (Bloomberg) -- Deutsche Lufthansa AG, Europe’s second-biggest carrier, will restart regular service to Baghdad, the first of the western European and U.S. carriers to resume flights to the Iraqi capital.
The airline will serve Baghdad from Munich beginning Sept. 30, following a 20-year break, as economic growth attracts customers to the former war-ridden country, Cologne-based Lufthansa said in a statement today. A Boeing 737 operated by Switzerland-based PrivatAir on Lufthansa’s behalf will offer four weekly flights, it said.
The carrier offered Baghdad flights between 1956 and 1990, when it stopped service because of the first Gulf War, during which a U.S.-led army pushed Iraq’s forces out of neighboring Kuwait. The Middle Eastern nation aims to double oil production and lift revenue from crude sales by 60 percent in the coming four years even as it struggles to find a government that’s acceptable to all its major ethnic and religious groups.
“Even if Iraq doesn’t seem like a very attractive destination at the moment, in the long run Lufthansa is doing the right thing,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, who recommends investors “buy” the shares. “It’s also an expression of the historically good relationship between Germany and the Arab states, which take such positive signals very seriously.”
Middle East Flights
Lufthansa transported 1.56 million passengers on routes to the Middle East and Africa in the four months through April, up 41 percent from a year earlier, according to the company’s website. The airline started service to Erbil in northern Iraq last month from its Frankfurt hub. Lufthansa’s Austrian Airlines unit has also offered flights there from Vienna since 2006.
“Against the backdrop of the economic recovery and as foreign companies establish themselves in the country, there is growing demand for flights to Iraq,” Lufthansa said in the statement.
Turk Hava Yollari AO, also known as Turkish Airlines, became the first carrier in Europe to resume Baghdad flights to in October 2008. The airline is offering one daily connection, according to its website. Bahrain-based Gulf Air began serving the Iraqi capital in September, while Abu Dhabi-owned Etihad Airways followed last month. Both airlines operate five flights there a week, according to their websites.
European Competitors
British Airways Plc isn’t currently planning to fly to Iraq, while Air France-KLM Group is looking at whether serving the country would make sense, spokesmen at both companies said. Lufthansa’s decision may put pressure on other European airlines to follow suit, Pieper said.
Iraq’s government said this week it will dissolve state- owned Iraqi Airways after Kuwait raised legal action, seeking $1.2 billion in compensation for 10 planes taken by Iraqi dictator Saddam Hussein during the war.
The country’s oil riches may help it maintain an economic growth rate of about 7 percent this year, Central Bank Governor Sinan Al-Shabibi said May 21. Last year, the economy grew by the same amount. Iraq holds the world’s third-largest oil reserves, with 115 billion barrels, behind Saudi Arabia and Iran.