The most detailed write-up I have found regarding the AIP between the Treasury and airlines.
NYTimes article.
“Treasury officials determined that 70 percent of the grants to airlines would benefit taxpayers through payroll and income tax receipts and by reducing the unemployment insurance payments that the government would have paid to airline workers had they lost their jobs.
The remaining 30 percent would not directly benefit taxpayers, and therefore would be repaid as a loan over a period of 10 years, a senior Treasury official said on Tuesday.
The Treasury will also receive stock warrants worth 10 percent of the loan amount that exceeds $100 million.
The official said that the structure of the agreement was a carefully negotiated compromise, as airlines were seeking grants with no repayment and the administration preferred loans. The economic relief legislation also allocated a separate $25 billion specifically for loans to the airlines, but the official said that negotiations with the companies for those funds had not begun.”
So this is how I read this. From previous communications we were told the grant amount we would be receiving was approximately $220 million. So $66 million of that would have to repaid over 10 years on a low interest loan, and because that $66 million falls under the $100 million mark, Frontier doesn’t have to issue warrants for 10% of that loan.
American, for example, is accepting $5.8 billion in grants, $1.74 billion of which will be on a 10-yr loan. They’ll also have to issue stock warrants for up to $174 million near the current market rate (around $11.50/share). So if AA’s stock rebounds to say $25/share (it was around $28 before the crash), the government can exercise the warrants and double their money, but that’s still peanuts in comparison to the money AA is receiving from this grant.