US Treasury sets $492 million minimum price for airline warrants auctions

Hawaiian Holdings

28/05/2024 21:28

By David Shepardson
       WASHINGTON, May 28 (Reuters) - The U.S. Treasury
Department has set a minimum of $492 million in total it is
seeking in next week's auctions to sell warrants to purchase
shares in U.S. airlines the government received in exchange for
COVID-19 assistance.
    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.
    American Airlines  AAL.O  received $12.6 billion in
government assistance, followed by Delta Air Lines  DAL.N  
$11.9 billion, United Airlines  UAL.O  $10.9 billion, and
Southwest Airlines  LUV.N  at $7.2 billion.
    Seven other airlines received smaller awards, including $2.2
billion for Alaska Airlines  ALK.N .
    Treasury plans to auction its warrants in the 11 airlines
starting Monday. The air carriers declined comment or did not
immediately answer if they plan to take part 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  SKYW.O , $17 million for
Alaska Air, $2.9 million for Hawaiian Airlines  HA.O , $1.9
million for Frontier Group  ULCC.O  and $1.7 million for
Southwest.
    The Treasury is seeking at least $50,000 per airline for its
warrants in Allegiant  ALGT.O , Spirit Airlines  SAVE.N , and
JetBlue. Those warrants and others are priced below the current
trading prices of the carriers' stocks.
    The warrants expire between April 2025 and June 2026.
    The U.S. government also extended $25 billion in low-cost
loans to airlines. Treasury said "the proceeds of these sales
will provide additional returns to the American taxpayer from
the financial assistance and liquidity that Treasury provided to
these airlines during the pandemic."
    The pandemic prompted a historic collapse in air travel
demand. U.S. air passenger travel fell by 60% in 2020 to its
lowest since 1984, down more than 550 million passengers, as
airlines slashed costs and struggled to survive.

 (Reporting by David Shepardson; Editing by David Gregorio)
 ((David.Shepardson@thomsonreuters.com; 2028988324;))