US could get stake in airlines in exchange for virus grants

The Trump administration is raising the possibility of the government getting ownership stakes in U.S. airlines in exchange for $25 billion in direct grants to help the carriers survive a downturn caused by the coronavirus pandemic, according to people familiar with the matter.

Details were unclear on Thursday, but one approach being considered by Treasury Secretary Steven Mnuchin is to give the government warrants — options to buy shares in airlines that accept grant money, the people said.

A key factor would be the price at which the government could exercise the warrants. Airlines would balk if the government could buy their shares near the current, depressed prices.

The issue is wrapped up in discussions between the Trump administration and Republicans and Democrats in Congress over a $2 trillion plan designed to soften the economic blow of the COVID-19 outbreak. The Wall Street Journal reported earlier that Mnuchin disclosed the plan for the government to take stakes in airlines during final negotiations over the rescue plan.

Officials from the Treasury Department did not immediately respond to a request for comment.

Aid to airlines is one of the last sticking points in Washington's negotiations over the economic-rescue plan. The White House and Senate Republicans had favored only zero-interest loans and loan guarantees to the airlines, while Democrats supported the industry’s request if they were accompanied by conditions such as a ban on stock buybacks and limits on executive compensation.

Some lawmakers questioned the need to give cash from taxpayers to the airlines, which have enjoyed a decade-long run of huge profits and spent much of it buying back their own shares. Buybacks tend to raise stock prices by reducing the number of shares in circulation, which can benefit executives whose compensation is...