WASHINGTON, DC – When the pandemic hit and caused severe economic turbulence for the airline industry, U.S. Senator Jack Reed was confident the economy would recover and included a provision in the air travel rescue package to ensure taxpayers were compensated for bailing out big businesses.

Thanks to Reed’s law, the U.S. Treasury Department announced taxpayers received $556,685,001 in proceeds this month from a series of auctions held from June 3 to 13, 2024, to sell its warrants for common stock of 11 publicly traded airlines.

The airlines issued these warrants to Treasury in 2020 and 2021 as partial compensation for financial assistance and loans that Treasury provided to the airlines under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act of 2021.

“This is positive news for taxpayers,” said Senator Reed, a senior member of the Banking Committee.  “At a critical moment during the pandemic, taxpayers stepped up to stabilize the airline industry at a time of severe crisis.  I wrote the law to ensure that taxpayers would share in the benefits when these companies recovered, and they did.  Now, the airlines are making record profits and taxpayers deserve to see these returns in a fair and transparent process.”

Consistent with the law, Treasury conduct a series of auctions, selling its warrants to purchase the common stock of certain publicly traded airlines.  The stocks were offered to qualified institutional investors, institutional accredited investors, or the issuing airlines themselves.

The proceeds from these sales will provide additional returns to American taxpayers following the financial assistance and liquidity that the Treasury provided to these airlines during the pandemic.

In 2020 and 2021, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); the Consolidated Appropriations Act, 2021; and the American Rescue Plan Act of 2021, Treasury offered financial assistance and loans to U.S. airlines and certain other types of businesses.

Overall, Congress approved $54 billion in COVID-19 air carrier bailouts in 2020 and 2021. Airlines were required to repay $14 billion of that total and Treasury received warrants to purchase stock at the share price of the time of the awards.

Participating airlines included American Airlines, Delta Air Lines, United Airlines, Southwest Airlines, Jet Blue Airways, Alaska Airlines, and several others.  The warrants expire between April 2025 and June 2026.

When taxpayers were forced to invest in banks to save the economy from total collapse during the 2008 global financial crisis, Reed wrote a similar warrants law as part of the Emergency Economic Stabilization Act (EESA) of 2008 that enabled Treasury to receive warrants in connection with the purchase of troubled assets so that taxpayers might be able to profit should the firms flourish after selling their bad debts to the government.  Thanks to that law, American taxpayers have earned $10 billion in additional dividends – money that would have otherwise been kept by the rescued banks.