David Shepardson
WASHINGTON (Reuters) – The U.S. Treasury Department said on Friday it received $556.7 million in proceeds from auctions of warrants for 11 major U.S. airlines that the government received in exchange for COVID-19 relief.
The proceeds represent only a fraction of the total aid provided to airlines.
Congress has approved $54 billion in Covid-19 relief for airlines in 2020 and 2021. The airlines were required to pay $14 billion of that amount, and the Treasury received warrants to purchase shares at the share price at the time the award was paid.
The warrants expire from April 2025 to June 2026.
The Treasury set revised minimum prices for warrants totaling $458 million. A Treasury spokesman said the government plans to publicly announce sale prices at individual auctions later this summer.
American Airlines (NASDAQ:) received $12.6 billion in government aid, followed by Delta with $11.9 billion, United Airlines with $10.9 billion and Southwest with $7.2 billion.
Seven other airlines received smaller awards, including $2.2 billion for Alaska Airlines.
Treasury set reserve prices of $221 million for its Delta warrants, $159 million for United, $25 million for American Airlines, $30 million for SkyWest (NASDAQ:), $17 million per Alaska Air (NYSE:), $2.7 million for Hawaiian Airlines, $1.9 million for Frontier Group and $1.7 million for Southwest.
The Treasury asked for at least $50,000 per airline for its warrants in Allegiant. Spirit Airlines (NYSE:) and JetBlue. These and other warrants were priced below current trading prices for the carriers’ shares.
Southwest Airlines (NYSE:) and Delta Air Lines (NYSE:) declined to comment, while the other airlines did not immediately respond to requests for comment.
The US government also provided $25 billion in low-cost loans to airlines.
The 2020 pandemic caused a historic collapse in demand for air travel. US air passenger traffic fell 60% in 2020 to its lowest level since 1984, down more than 550 million passengers as airlines cut costs and struggled to survive.