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

The US Treasury Department has set a minimum of $492m in total it is seeking in next week's auctions to sell warrants to purchase shares in US airlines the government received in exchange for COVID-19 assistance. Congress approved $54b in COVID-19 air carrier bailouts in 2020 and 2021. Airlines were required to repay $14b of that total and Treasury received warrants to purchase stock at the share price of the time of the awards. American Airlines received $12.6b in government assistance, followed by Delta Air Lines $11.9b, United Airlines $10.9b, and Southwest Airlines at $7.2b. Seven other airlines received smaller awards, including $2.2b for Alaska Airlines. 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 $221m for its Delta warrants, $159m for United, $59m for American Airlines, $30m for SkyWest, $17m for Alaska Air, $2.9m for Hawaiian Airlines, $1.9m for Frontier Group and $1.7m for Southwest. The Treasury is seeking at least $50,000 per airline for its warrants in Allegiant, Spirit Airlines, 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 US government also extended $25b 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/>