By David Shepardson
WASHINGTON (Reuters) – The U.S. Treasury Department has set a minimum of $492 million in total it is seeking in auctions next week to sell warrants to buy shares of U.S. airlines that the government received in exchange for assistance against to COVID-19.
Congress approved $54 billion in COVID-19 airline bailouts in 2020 and 2021. Airlines were required to repay $14 billion of that total and the Treasury received warrants to buy shares at the stock price at the moment of grant.
American Airlines received $12.6 billion in government assistance, followed by Delta Air Lines with $11.9 billion, United Airlines with $10.9 billion, and Southwest Airlines with $7.2 billion. .
Seven other airlines received smaller awards, including $2.2 billion for Alaska Airlines.
The Treasury plans to auction its warrants on the 11 airlines starting Monday. The air carriers declined to comment or did not immediately respond to whether they intended to participate in the auction.
Treasury set reserve prices of $221 million for its Delta warrants, $159 million for United, $59 million for American Airlines, $30 million for SkyWest, $17 million for Alaska Air, $2.9 million to Hawaiian Airlines, $1.9 million to Frontier Group and $1.7 million to Southwest. .
Treasury is seeking at least $50,000 per airline for its warrants in Allegiant, Spirit Airlines and JetBlue. These warrants and others are priced below the current trading prices of the carriers’ shares.
The warrants expire between April 2025 and June 2026.
The US government also provided $25 billion in low-cost loans to airlines. Treasury said “proceeds from these sales will provide additional returns to the American taxpayer from the financial assistance and liquidity that Treasury has provided to these airlines during the pandemic.”
The pandemic caused a historic collapse in demand for air travel. U.S. passenger air travel fell 60% in 2020 to the lowest since 1984, a drop of more than 550 million passengers, as airlines slashed costs and struggled to survive.
(Reporting by David Shepardson; Editing by David Gregorio)
