April 26 (Reuters) – A group of U.S. budget airlines, including Frontier and Avelo, is seeking $2.5 billion in U.S. government assistance in exchange for warrants that could convert into equity stakes in the companies, the Wall Street Journal reported on Sunday.
The chief executives of several low-cost carriers were in Washington last Tuesday to meet with Transportation Secretary Sean Duffy and Federal Aviation Administration chief Bryan Bedford, the report said, adding that discussions regarding a potential aid package are expected to continue in the coming days.
The budget airline group arrived at the $2.5 billion figure by calculating how much more they estimate they will spend on jet fuel this year than in earlier forecasts, assuming jet fuel prices remain above $4 a gallon on average, according to the WSJ report.
Reuters could not immediately verify the report. The White House, Frontier, and Avelo did not respond to a request for comment.
The pitch underscores one of the unintended consequences of the Iran war launched by Washington: a surge in jet fuel prices that has roughly doubled costs, squeezing margins and pushing weaker airlines closer to the brink.
The request from budget airlines comes as the Trump administration nears a deal to rescue low-cost carrier Spirit Airlines, which could include up to $500 million in government-backed financing to help it keep operating through bankruptcy.
During the pandemic, the U.S. Treasury received warrants in major airlines in exchange for aid under a $54 billion support program. It ultimately collected just $556.7 million from selling them, with many proving to have little value.
(Reporting by Chandni Shah in Bengaluru; Editing by Sumana Nandy and Rashmi Aich)
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