Treasury Secretary Steven Mnuchin indicated that the U.S. government would take stakes in airlines in exchange for billions of dollars in direct grants to the companies as part of a $2 trillion economic rescue package, the Wall Street Journal reported. He detailed his plans during last-minute negotiations when the aid to airlines emerged as a major legislative sticking point. Republicans had rejected providing cash grants to airlines, and an earlier version of the legislation would have provided $50 billion in loans and loan guarantees to passenger airlines and $8 billion to cargo airlines — but no direct aid. Mnuchin has previously signaled such a move was on the table, saying last week that equity stakes could be part of the eventual aid package. 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. Airlines for America, the industry group for U.S. carriers, said the direct payroll grants would help airlines continue paying workers. “We remain hopeful that the federal government will expeditiously release these funds with as few restrictions as possible to ensure airlines are able to utilize these provisions and meet our payroll,” the group said. Its statement didn’t address the issue of the government taking stakes in companies.
