US to hold auctions to sell airline warrants received during COVID bailouts

The U.S. Treasury Department said on Friday it planned to conduct a series of auctions to sell the warrants to purchase stock in U.S. airlines that it received after Congress approved $54b in COVID-19 air carrier assistance in 2020 and 2021. Out of the $54b awarded, airlines were required to repay $14 billion. Treasury received warrants to purchase stock at the share price of the time of the government awards. Airlines accepting government assistance were prohibited from imposing furloughs or firing workers and faced limits on executive compensation and bans on stock buybacks and dividends that expired in September 2022. American Airlines received $12.6b in government assistance, followed by Delta Air Lines at $11.9b, United Airlines at $10.9b, and Southwest Airlines at $7.2b. Seven other airlines received smaller awards, including $2.2 billion for Alaska Airlines. According to a Reuters calculation, opens new tab, the warrants are worth about $478m at Friday's closing share prices. Many of the airline warrants are priced below the current trading prices of the carriers' stocks. Treasury held a call with airlines to inform them of the plan, airline officials said. The US 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."<br/>