(The Center Square) – Taxpayers received over half a billion dollars from airline auctions held earlier this month, according to a press release from the U.S. Treasury Department.
The series of auctions were for common stock of 11 airlines. The airlines included were Alaska Air Group, American Airlines Group Inc., Allegiant Travel Company, Delta Air Lines, Frontier Group Holdings, JetBlue Airways Corporation, Hawaiian Holdings, SkyWest, Southwest Airlines Co., Spirit Airlines, and United Airlines Holdings.
The auctions resulted in over $556 million being generated.
The Department of the Treasury helped to provide financial assistance to several airlines amidst the COVID-19 pandemic starting in 2020.
“The airlines issued these warrants to Treasury in 2020 and 2021 as partial compensation for financial assistance and loans that Treasury provided to the airlines under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act of 2021,” the federal agency said.
“Treasury’s sale of these warrants is a part of its continuing post-pandemic efforts to recover value for taxpayers in an orderly, fair, and transparent manner,” Treasury spokesperson Christopher Hayden told The Center Square.
“The assistance Treasury provided from the pandemic-era legislation saved a large number of aviation industry jobs and allowed many employees to keep their healthcare during a time when the number of airline passengers had dropped by 60%,” Hayden told The Center Square. “Recipient businesses reported using the assistance to fund the salaries and benefits of more than 640,000 aviation employees, help maintain critical infrastructure capacity, and facilitate industry recovery. Additionally, recipients reported more than 360,000 aviation jobs being retained or created because of the federal assistance.”
The Department of the Treasury originally announced their plan to auction off the airline warrants in May.
“The proceeds of these sales will provide additional returns to the American taxpayer from the financial assistance and liquidity that Treasury provided to these airlines during the pandemic,” the agency said in its release.
“In addition to the proceeds from the warrant auctions, Treasury has so far received approximately $2.7 billion in principal and interest repayments from aviation and national security businesses that received loans from Treasury under the CARES Act,” Hayden said. “Of the 35 loans that Treasury made in 2020, 15 borrowers have fully repaid their loans.”
Many United States airlines struggled financially during the COVID-19 pandemic in 2020 and 2021 due to travel restrictions and flight cancellations.
Many flights were canceled in early 2020 due to COVID-19 impacting airline travel, according to data from the Bureau of Transportation Statistics (BTS).
“The March 2020 flight cancellation rate —17% of flights were canceled— at the time was the highest since September 2001, when 20% of flights were canceled,” according to a 2020 report from BTS. “The cancellation rate was exceeded in April when 41% of flights were canceled.”
Levels of profitability for many airlines have increased the past few years since COVID-19 travel restrictions have eased.
The International Air Transport Association (IATA) stated in a press release from this month that its airline profitability projections for 2024 were “strengthened” compared to two of its 2023 forecasts.
— By Ireland Owens | The Center Square
