Azerbaijan Airlines

Foundation and early years

The first air squadron in Azerbaijan was formed on 2 June 1938. This date was declared the Azerbaijan Civil Aviation Day under the Decree of the President of the Republic of Azerbaijan in 2006. During the period from 1941 to 1945, Azerbaijan aviation worked under the motto "All for the Front".

In 1990, Azerbaijan announced that it was to set up its own airline, and that it would be independent from Aeroflot, the long-time provider of air services for the Soviet republics. Azerbaijan Airlines (AZAL) was officially established on 17 August 1992 but the first scheduled flights had already begun in the month of April. Its first president was Vagif Sadykhly.

Formed from the regional branch of Aeroflot, Azərbaycan Hava Yolları-Azerbaijan Airlines soon spread its wings into the world outside the Soviet Union, which had been Aeroflot's exclusive domain. A scheduled Baku-Istanbul route was launched in January 1991 in partnership with Turkish Airlines, and the cargo enterprise Aviasharg was created in cooperation with the United Arab Emirates. AZAL inherited a huge fleet from Aeroflot, including more than 20 Soviet-made Tupolev airliners, some regional airliners and freighters, 90 light aircraft, and 50 helicopters. It was quick to lease a pair of Boeing 727s, however, that once belonged to Pan Am (and were built in 1968). AZAL had an extensive involvement with the Farhad Azim associated Aviation Leasing Group (ALG), a U.S.-based lessor of Boeing 727s. It had a transatlantic charter cargo joint venture with ALG's Buffalo Airways, which was also training AZAL aircrews to Western standards in Dallas, Texas.

The airline grew rapidly, and by the mid-1990s, a reorganization was necessary. Several operating divisions were created, two of which later became fully-fledged subsidiaries:

- AZAL Agro, tasked with aerial work, essentially spraying agricultural areas. The fleet consisted of the rustic Antonov 2s, with its headquarters and operational base at Yevlakh airfield.

- AZAL Avia Cargo, founded in 1996 and responsible for cargo charter flights, it was activated in December 1997 and subsequently also operated scheduled flights. This company, its operations, and its fleet were subsequently reintegrated into the parent company.

In November 1994, AZAL began a route to Dubai, which, along with Istanbul, was a key source of Western goods. It was soon also flying to Tehran, Tel Aviv, Saint Petersburg, London, and China. Service to several regional destinations was suspended in mid-1998, due to low margins and the need to repair three Yak-40 aircraft. With the exception of a few major cities, service to neighboring CIS countries was suspended in January 1999, due to debt. These routes were generally unprofitable as well, and were facing new competition from trains. According to the Trend News Agency, domestic flights accounted for only about 16 percent of AZAL's traffic in 1998.

Azerbaijan's border dispute with Armenia over Nagorno-Karabakh had delayed financing for two new Boeing 757s from the U.S. Ex-Im Bank. The $66 million loan guarantee was the Ex-Im Bank's first transaction for Azerbaijan, according to Air Transport Intelligence. The financing was also guaranteed by the Azerbaijan government and the International Bank of Azerbaijan. The United Kingdom's Export Credits Guarantee Department guaranteed financing for Rolls-Royce engines, utilized by both Boeing 757s.

Development since the 2000s

The first of the 757s was delivered in the fall of 2000. The planes offered the carrier unprecedented range, comfort, and efficiency on long-haul international routes. They also helped project a modern image to the world. The second Boeing 757 to be delivered arrived in December laden with medical supplies due to a recent earthquake in Azerbaijan. In January 2001, AZAL used one of the planes to begin operating a Paris-Baku route in collaboration with Air France.

After the September 11 attacks, Azerbaijan, like other nations, experienced a noticeable decline in air travel. AZAL was able to remain profitable through 2001, however, and even make progress toward paying off its debt. The airline was soon shopping for more new aircraft as it retired its aging Soviet models. AZAL ordered its first Western-made helicopters in October 2002, purchasing six for EUR 52 million from Eurocopter. AZAL used helicopters to ferry personnel and equipment out to oil rigs in the Caspian Sea.

The state-owned company was privatized in the 2000s, during which ownership of the company's assets ended up in the hands of companies owned by family members of Azerbaijani political elites, including President Ilham Aliyev's daughter Arzu Aliyeva.

In July 2004, two of AZAL's airliners were impounded by Turkey over a 12-year-old debt owed by Azerbaijan's Agriculture Ministry to a Turkish company.