OFAC Sanctions Air Baghdad: Implications of Sanctions in the Airline Industry

In general, sanctions are restrictions — financial, trade, or travel-related — applied to individuals and entities enacted by individual states or through collaboration on a global scale. In the aviation industry, sanctions imposed by the United States, amongst others, can be imposed on aircraft airframes and engines, as well as aircraft owners, lessors, and airline companies for the carriage of certain individuals, weapons, fighters, and financial resources to perpetrate violence and conflict. Failure to comply with these sanctions can lead to hefty fines, irreparable reputational damage, and potential enforcement actions.

Sanctions on Air Baghdad

The most recent airline to be sanctioned by the US Office of Foreign Assets Control (OFAC) is now Fly Baghdad and its CEO and owner, Basheer Al-Shabbani, for allegedly aiding the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its proxy groups in Iraq, Syria, and Lebanon, as determined by the official statement released by the US Department of the Treasury released on 22 January 2024.[1]  In accompaniment to this news, OFAC has also issued its General License (GL) 27 to applicable parties involved in aircraft leases, refueling contracts, and other commercial agreements to wind down any transactions involving Fly Baghdad by 22 March 2024.[2] Aircraft lessors will likely seek to commence repossession and grounding of leased aircrafts to Air Baghdad in compliance with their lease agreements.

Preventative Measures

To prevent any disruption of business, we advise airline companies to conduct thorough search of the sanctions list of individuals from the authorities in each country they operate to avoid carriage of sanctioned persons. We note that this is pivotal as the list of sanctioned individuals has increased due to the rise in regional conflicts in Russia, Iran, and Syria. Furthermore, for aircraft lessors to safeguard themselves from engaging with potentially sanctioned airlines, we advise that they keep abreast of the latest sanctions in relation to the ownership structures of the airlines, its flight operations and activities, and of any entities or individuals.

How can we help?

Al Tamimi & Company’s Aviation team is experienced in assisting airline companies and aircraft leasing companies to navigate complex sanctions related issues that arise in the region. Our team further has extensive experience grounding and repossessing aircrafts successfully on behalf of aircraft and owners. In addition, we have rights of audience before the courts across in Bahrain, Egypt, Iraq, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, and UAE, as well as local insights that have enabled us to represent clients in complex local and multi-jurisdictional claims, defences, and commercial transactions. For further information on this sector or for any inquiries for assistance, please contact our team.

[1] https://home.treasury.gov/news/press-releases/jy2037

[2] https://ofac.treasury.gov/faqs/1159