Budget airlines pitch US government aid under $2.5 billion relief plan: Report

A group of US budget airlines, including Frontier and Avelo, is seeking $2.5 billion in US 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 that a healthy airline industry with strong competition is important to the US 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 US Treasury received warrants in major airlines in exchange for aid under a $54 billion support program, but ultimately collected just $556.7 million from selling them, as many proved to be of little value.