Budget airlines pitch US government aid under $2.5 billion relief plan, WSJ reports

(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 be converted into equity stakes, the ‌Wall Street Journal reported on Sunday.

Chief executives of several low-cost carriers met with Transportation Secretary Sean Duffy and Federal Aviation Administration chief Bryan Bedford in Washington last ​Tuesday, the newspaper said, adding that discussions over a potential aid ​package are expected to continue in the coming days.

According ⁠to the report, the group arrived at the $2.5 billion figure by estimating how ​much more it expects to spend on jet fuel this year compared with earlier forecasts, ​assuming prices remain above $4 a gallon on average.

Reuters could not immediately verify the report. The White House and Frontier did not respond to a request for comment.

A ​spokesperson for Avelo said the airline had no specific comment on the report, ​but said it “emphatically agree[s] that a healthy airline industry with strong competition is important ‌to ⁠the U.S. economy, especially during this period of high fuel prices”.

The pitch highlights 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 move also 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 continue operating through bankruptcy proceedings.

During the COVID-19 pandemic, the U.S. Treasury received warrants in major airlines in exchange for aid under a $54 billion support ⁠programme, but ​ultimately collected just $556.7 million from selling them, ​as many proved to be of little value.