Treasury Secretary Steven Mnuchin reportedly indicated that the $2 trillion fiscal stimulus package includes a government ownership stake in airlines as part of their bailout.
The government would gain its equity positions in exchange for direct grants, knowledgeable sources told The Wall Street Journal.
The Senate passed the stimulus late Wednesday night, and the House is expected to do so Friday morning. The bill gives the airlines a total of $50 billion, which is what they requested last week. That total is broken into $25 billion of loans and guarantees and $25 billion in direct grants.
The exact structure of the equity stakes isn’t clear, The Journal reported. The Senate bill cited warrants, options, preferred stock, debt securities or notes as possibilities to “provide appropriate compensation” to the government for its aid.
Carriers have pleaded for assistance in recent days, as the coronavirus has kept potential travelers in place, and the airlines have been forced to cancel many of their flights.
Some analysts say that even the government bailout may not stave off bankruptcy for the airlines. One problem is that some of their own staff and air-traffic controllers are suffering from the coronavirus, making it difficult to schedule flights.
And to be sure, not everyone is sympathetic to the airlines.
“The public has subsidized the industry by providing de facto insurance against hard times in the form of bailouts or merger approvals,” writes Tim Wu, a Columbia University law school professor, in The New York Times. “And now here we go again.”