Budget airlines ask White House for US$2.5 billion relief plan: WSJ
With kerosene costs doubling, the industry is heading into months of uncertainty
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[WASHINGTON] Budget airlines are banding together to ask the White House for a relief plan worth US$2.5 billion in exchange for convertible equity stakes in the carriers, The Wall Street Journal said.
The group of airlines, which includes Frontier Airlines and Avelo, calculated the US$2.5 billion figure by estimating the increase in their jet-fuel spending in 2026 compared with earlier forecasts, the newspaper reported.
The projections assume that jet-fuel prices will remain above US$1.06 a litre on average for the remainder of 2026, it added.
The White House did not immediately respond to a request for comment about the report.
Representatives for Frontier did not immediately respond to requests made outside of normal business hours for comment.
Avelo said that while it has no comment on the specific report, it “emphatically (agrees) that a healthy airline industry with strong competition is important to the US economy, especially during this period of high fuel prices”.
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This proposal is separate from another, under which the US government could buy Spirit Aviation, an idea US President Donald Trump has touted as a good investment for the country.
He told reporters on Apr 23 he was considering “bailing them out, or buying it”, adding the US would acquire it “virtually debt-free”. He added: “They have some good aircraft and good assets.”
Discussions about US intervention to support the airline industry have proliferated amid uncertainty over his shifting statements on the Iran war and rising fuel prices, as the Strait of Hormuz remains closed.
SEE ALSO
The industry is heading into months of uncertainty in a year that should have had strong demand, with initial projections for a record US$41 billion in earnings and 5.2 billion passengers.
Airlines globally are grappling with a doubling of kerosene costs.
In the US, the pain is more acute with carriers not hedging prices, meaning they are 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 has approached White House officials about doing so with American Airlines, Bloomberg previously reported.
Scott Kirby, the CEO of United Airlines, told Bloomberg on Apr 22 he was eyeing rival airline assets, while sidestepping questions about a merger with American Airlines.
Meanwhile, American Airlines has sought a revenue-sharing deal with Alaska Airlines.
Transportation Secretary Sean Duffy met chief executives of low-cost carriers on Apr 21 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 per cent federal excise tax on airline tickets, a copy of a letter seen by Bloomberg News showed. BLOOMBERG
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