NEW YORK: Budget airlines are banding together to ask the White House for a relief plan worth US$2.5bil in exchange for convertible equity stakes in the carriers, according to the Wall Street Journal.
The group of airlines, which includes Frontier Airlines Holdings Inc and Avelo Inc, calculated the US$2.5bil figure by estimating how much more they would spend on jet fuel this year compared to earlier forecasts, the newspaper reported.
The projections assume jet fuel prices remain above US$4 a gallon on average for the remainder of 2026, it said.
The White House did not immediately respond to a request for comment about the Wall Street Journal report.
Representatives for Frontier and Avelo did not immediately respond to requests made outside of normal business hours for comment.
This proposal is separate from another under which the US government could buy Spirit Aviation Holdings Inc, an idea President Donald Trump has touted as a good investment for the country.
He told reporters last week he was considering “bailing them out, or buying it,” adding the United States would acquire it “virtually debt-free. They have some good aircraft and good assets”.
Discussions about US intervention to support the airline industry have proliferated amid uncertainty over Trump’s shifting statements on the Iran war and rising fuel prices as the Strait of Hormuz remains closed.
The industry is heading into months of uncertainty in what should have been a year of strong demand, with initial projections for a record US$41bil in earnings and 5.2 billion passengers.
Airlines globally are grappling with a doubling of kerosene costs.
In the United States, the pain is more acute with carriers not hedging prices, meaning they’re absorbing the jump in oil prices and the cost to refine it into jet fuel.
Rising concerns about the war’s impact come as larger US airlines seek to lead consolidation efforts.
United Airlines Holdings Inc has approached White House officials about doing so with American Airlines Group Inc, Bloomberg had previously reported.
United chief executive officer Scott Kirby told Bloomberg last week he was eyeing rival airline assets, while sidestepping questions about a merger with American Airlines. Meanwhile, American has sought a revenue-sharing deal with Alaska Airlines Group Inc.
Department of Transportation Secretary Sean Duffy met with chief executives of low-cost carriers last week to discuss the issues facing their industry.
The Association of Value Airlines has also asked congressional leaders for temporary relief from certain fees and taxes, including a suspension of the 7.5% federal excise tax on airline tickets, according to a copy of a letter seen by Bloomberg News. — Bloomberg
