A group of budget airlines is reportedly seeking $2.5 billion in assistance from the federal government to help offset the rising price of jet fuel.
The Wall Street Journal reported Sunday that the group, which is believed to include Frontier and Avelo, made the request at a meeting with U.S. Transportation Secretary Sean Duffy and FAA Administrator Bryan Bedford last week. In exchange for the bailout, the federal government would receive warrants that it could convert to ownership stakes in the airlines.
The newspaper cited people it said are familiar with the discussions.
It was not immediately clear which other low-cost airlines are part of the group seeking a federal rescue. It was also not known how far along the talks have come, or if the DOT and FAA are inclined to accept the deal.
The U.S. government has authorized financial assistance to air carriers in exchange for warrants before, most notably during the COVID-19 pandemic. Those warrants were later auctioned off, with the proceeds flowing back to the U.S. Treasury.
A decision by the federal government to convert those warrants and actively maintain investments in a group of low-cost carriers would be unprecedented, and could transform the sector by providing an implicit guarantee that the airlines will not fail.
Separately, Spirit is reportedly working with the administration on a potential $500 million assistance package. The deal would also come with equity for the federal government.
Late last week, President Donald Trump suggested that the government should buy Spirit outright, appoint a qualified leader to run it, then sell it at a profit when the price of oil eventually comes down.
