WSJ: Mnuchin Indicates US to Take Stakes in Airlines in Exchange for Grants

Mnuchin Indicates US to Take Stakes in Airlines in Exchange for Grants

March 26 2020 10:01 am
Mnuchin Indicates US to Take Stakes in Airlines in Exchange for Grants
The US Treasury Secretary indicated the US government would take stakes in airlines in exchange for direct grants.PHOTO: NICHOLAS KAMM/AGENCE FRANCE-PRESSE/GETTY IMAGES

Treasury Secretary Steven Mnuchin indicated that the government would take stakes in airline carriers in exchange for billions in direct grants to the companies, part of a $2 trillion economic rescue package, said people familiar with the matter. While it wasn’t clear what form the investment would take, one option is a warrant that converts into equity. A warrant gives the buyer the option to buy shares at a certain price. A Treasury spokesman didn’t immediately respond to a request for comment.

The Context

Mnuchin detailed his plans during last-minute negotiations when the aid to airlines emerged as a major sticking point. Republicans had rejected providing cash grants to airlines, and an earlier version of the legislation would have provided $50bn in loans and loan guarantees to passenger airlines and $8bn to cargo airlines, but no direct aid. The version of the legislation that passed the Senate on Wednesday would provide $25bn in loans and guarantees to passenger airlines, with the remaining $25bn in the form of direct grants.

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