Airline stocks are set to surge after the 'big 4' accepted more than $15 billion in government bailouts - Business Insider

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• Shares in the "big four" US airlines jumped in pre-market trading on Wednesday after they accepted government bailouts to avoid layoffs during the novel coronavirus pandemic.
• American Airlines jumped 10%, United Airlines rose 9%, and Delta Air Lines and Southwest Airlines both gained about 7%.
• The carriers initially resisted requirements to repay 30% of the grants and hand over warrants equal to 10% of the loan portion, which the US government can convert into stock in the future.
• Delta is set to receive a total of $5.4 billion, Southwest anticipates $3.3 billion, and American expects to receive $5.8 billion and apply for a separate $4.8 billion loan.
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Shares in the "big four" US airlines surged in pre-market trading on Wednesday after the quartet accepted government bailouts to help them retain workers during the novel coronavirus pandemic.

American Airlines soared 10%, United Airlines jumped 9%, and Delta Air Lines and Southwest Airlines both gained about 7%.

Investors sent their stocks higher as they expect the payroll grants — which are part of the $2 trillion stimulus package passed by Congress last month — to keep them operating this summer despite immense challenges. Delta's CEO said this month that the airline is burning $60 million in cash each day, and demand has plummeted 95%.

The carriers initially resisted some of the terms of the relief. They bristled at having to repay 30% of the grants and hand over warrants — which can be converted into stock in the future — to the government equal to 10% of the loan portion.

Read more: A Wall Street strategy chief lays out 8 stock trades that can give investors an extra jolt of returns as the post-coronavirus rally enters a new phase

Accepting the bailout also restricts their ability to lay off staff, cut service routes, buyback stock, pay dividends, and reward executives in the coming months.

Three of the "big four" airlines have outlined their bailout deals in principle (United hasn't yet published the terms of its agreement):

Read more: 450 flips with no prior experience: Here's the 3-part real-estate-investing strategy a former Microsoft engineer is using to generate 'piles of cash' in a market that's nearing recession

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Airline stocks are set to surge after the 'big 4' accepted more than $15 billion in government bailouts - Business Insider
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