US Treasury receives $556.7 million from auction of airline warrants (updated)

Hawaiian Holdings

21/06/2024 22:25

(Adds comment from Treasury on specific carriers, no comments
from two airlines, details, paragraphs 4-5, 8-11)
    By David Shepardson
       WASHINGTON, June 21 (Reuters) - The U.S. Treasury
Department said on Friday it received $556.7 million in proceeds
from auctions to sell warrants in 11 major U.S. airlines the
government received in exchange for COVID-19 assistance.
    The proceeds are a fraction of the total assistance awarded
to airlines. 
    Congress approved $54 billion in COVID-19 air carrier
bailouts in 2020 and 2021. Airlines were required to repay $14
billion of that total and Treasury received warrants to purchase
stock at the share price of the time of the awards.
    The warrants expire between April 2025 and June 2026.
    Treasury had set revised minimum prices for the warrants of
$458 million in total. A Treasury spokesperson said the
government plans to publicly announce the individual auction
sale prices later this summer.
    American Airlines  AAL.O  received $12.6 billion in
government assistance, followed by Delta $11.9 billion, United
Airlines  UAL.O  $10.9 billion, and Southwest at $7.2 billion.
    Seven other airlines received smaller awards, including $2.2
billion for Alaska Airlines  ALK.N .
    Treasury set reserve prices of $221 million for its Delta
warrants, $159 million for United, $25 million for American
Airlines, $30 million for SkyWest  SKYW.O , $17 million for
Alaska Air, $2.7 million for Hawaiian Airlines  HA.O , $1.9
million for Frontier Group  ULCC.O  and $1.7 million for
Southwest.
    The Treasury sought at least $50,000 per airline for its
warrants in Allegiant  ALGT.O , Spirit Airlines  SAVE.N  and
JetBlue. Those warrants and others were priced below the current
trading prices of the carriers' stocks.
    Southwest Airlines  LUV.N  and Delta Air Lines  DAL.N 
declined to comment, while other airlines did not immediately
respond to requests for comment. 
    The U.S. government also extended $25 billion in low-cost
loans to airlines.
    The 2020 pandemic prompted a historic collapse in air travel
demand. U.S. air passenger travel fell by 60% in 2020 to its
lowest level since 1984, down more than 550 million passengers,
as airlines slashed costs and struggled to survive.


 (Reporting by David Shepardson in Washington
Editing by Franklin Paul and Matthew Lewis)
 ((David.Shepardson@thomsonreuters.com; 2028988324;))