The US Treasury Department is holding firm on the terms of a $25 billion offer for government aid to airlines to help them meet payroll during the coronavirus downturn, officials said on Monday, and the plan could give the government more than 3% of American Airlines Group Inc (AAL.O).
Some airlines are increasingly resigned to the terms, which would require 30% of the funds — roughly based on six months of each carrier’s payroll — to be repaid and give the government warrants equal to 10% of the loan amount, the officials said, noting that agreements could be reached within the coming days. Under those terms, the government could end up with the largest equity stake in American Airlines, which has the most employees of the U.S. carriers and has said it was seeking about $6 billion in payroll support.
It also has the lowest market capitalization of the four main US carriers at about $5.3 billion, less than the amount it would receive in aid.
One airline official said the warrant price had been locked before Monday, when airline shares fell sharply.
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