Budget airline operators Frontier Group Holdings Inc. (NASDAQ:ULCC) and Avelo are reportedly among a group of airlines seeking a $2.5 billion relief package from President Donald Trump in exchange for convertible equity stakes in the companies.
Jet Fuel Costs
On Sunday, the Wall Street Journal reported that the airlines were factoring in jet fuel costs remaining above $4/gallon this year. Transportation Secretary Sean Duffy had earlier met with executives from low-cost carriers to discuss the sector’s challenges.
Frontier and Avelo didn’t immediately respond to Benzinga‘s request for comment.
According to data from Airlines For America, a consortium of various flight operators based in the U.S., the price for a gallon of jet fuel on Friday was $4.19.
Trump’s Spirit Acquisition
The news comes as Trump had signaled the White House could possibly acquire Spirit Aviation Holdings Inc. (OTC:FLYYQ) and sell the company later for a profit. He also said that the move would help the 18,000 employees who worked at the low-cost carrier and save jobs.
The airline was reportedly in talks with the Trump administration to finalize a $500 million funding package amid criticism from lawmakers like Sen. Elizabeth Warren (D-Mass). White House spokesperson Kush Desai shared that the government was monitoring Spirit’s situation.
Mergers In Aviation?
Duffy had earlier hinted at Trump’s approval for mergers in the U.S. aviation sector. The Transportation Secretary had said that the President “loved” big deals.
Meanwhile, as mergers come into the spotlight, Warren slammed United Airlines Holdings Inc. (NASDAQ:UAL) CEO Scott Kirby‘s comments about the operator possibly acquiring American Airlines Group Inc. (NASDAQ:AAL), calling the move “consolidation” and not “competition.”
Iran War
The global crude oil supply chain remains heavily affected by the war in Iran as tensions escalate. Trump canceled a trip by his representatives to Pakistan, where they were set to hold talks with officials from the Iranian government, citing “confusion” and “infighting” among the Iranian leadership.
On the other hand, Iranian strikes on U.S. assets in the region, like military bases, have reportedly cost over $5 billion since the war began. The reported cost has raised questions about transparency at the White House.
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