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