U.S. holds auction to sell airline warrants received during coronavirus bailout period By Reuters

David Shepherdson

WASHINGTON (Reuters) – The U.S. Treasury said on Friday it plans to conduct a series of auctions to sell warrants to purchase shares of U.S. airlines it received after Congress approved $54 billion in COVID-19 aid for aircraft carriers in 2020 and 2021. .

Airlines had to repay $14 billion of the $54 billion paid out. The Treasury Department received warrants to purchase shares at the stock price at the time of the government subsidy. Airlines that receive government support have been banned from imposing furloughs or laying off employees, and face limits on executive pay that expire in September 2022 and a ban on share buybacks and dividends.

American Airlines (NASDAQ:) received $12.6 billion in government support, followed by Delta Air Lines (NYSE:) with $11.9 billion, United Airlines with $10.9 billion, and Southwest Airlines (NYSE:) with $7.2 billion. I got the dollar.

Seven other airlines received smaller awards, including $2.2 billion for Alaska Airlines.

The warrants were worth about $478 million as of Friday’s close, according to Reuters calculations. The price of many airline warrants is lower than the current trading price of the airline’s stock.

The Treasury Department called airlines to notify them of the plan, airline officials said.

The U.S. government also extended $25 billion in low-cost loans to airlines.

“The proceeds from these sales will provide additional revenue to U.S. taxpayers from the financial support and liquidity the Treasury has provided to these airlines during the pandemic,” the Treasury said.

Delta and United declined to comment. Other major airlines had no immediate comment.

The auction is expected to begin the week of June 3, and the warrants will only be available for purchase by qualified institutional buyers, the Treasury Department said.

While aviation COVID-19 aid in many other countries has required higher rates of repayment, other U.S. industries have not received the same government financial support.

Air passenger travel in the U.S. fell 60% in 2020, falling by more than 550 million passengers to the lowest level since 1984, as airlines cut costs and struggle to survive. The coronavirus crisis has led to historically low demand for air travel. It collapsed.

Since then, air travel has returned to pre-COVID-19 levels and may set a new record this year.