With a Bailout Agreement in Place, Is It Safe to Buy Airline Stocks?

The airlines secured the first tranche of their bailout late Tuesday, with a group of 10 public and privately held carriers agreeing to terms to receive some of the $25 billion in payroll support authorized under the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The deals came after a week of negotiations over how the government would be compensated for its largesse, and includes the airlines issuing warrants totaling between 1% and 3% of their total equity. They also pledged to do no layoffs before Sept. 30, an important factor for the government, given the mounting jobless claims nationally.

"We welcome the news that a number of major airlines intend to participate in the Payroll Support Program," Treasury Secretary Steven T. Mnuchin said in a statement. "This is an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers."

Continue reading

Source Fool.com