Budget airlines seek government aid

Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors every morning. Good morning. Today is Monday, April 27th, and I'm your host, Kim Kahn, filling in for Julie Morgan. A group of U.S. budget airlines, including Frontier Group and Avello Airlines, is seeking about $2.5 billion in federal aid in exchange for warrants that could convert into equity stakes, the Wall Street Journal reports. The carriers base the figure on projected incremental jet fuel costs this year, assuming prices stay above $4 per gallon. Low-cost operators have been squeezed by higher jet fuel and labor costs amid weaker pricing power in a competitive domestic market. Airline executives met last week in Washington with Transportation Secretary Sean Duffy and FAA Administrator Brian Bedford. Talks on a potential aid package are ongoing. Separately, Spirit Airlines is discussing a possible $500 million support package with U.S. officials. Other low-cost peers, such as Allegiant Travel and Sun Country Airlines, face similar pressures, while larger carriers, including United and American, have also trimmed outlooks. As noted on Sunday's Wall Street Brunch, Senator Tom Tillis said the confirmation process for Kevin Warsh as Federal Reserve Chairman will move forward, but he also raised the possibility that current Chair Jay Powell could remain on the Board of Governors. Speaking on NBC's Meet the Press, Tillis said the Department of Justice will appeal Judge James Boasberg's ruling quashing subpoenas tied to the Fed, but stressed the appeal is limited in scope. This appeal is simply to challenge the basis for the ruling on the motion to quash the subpoenas, Tillis said. Powell will have to make his own decisions about whether to leave before his term expires in 2028, Tillis added, suggesting Powell may wait until the appeal is fully resolved, and then we can move on and let the Fed be independent. But he also said the appeal could be a lengthy process Prediction markets still show elevated odds of Powell exiting before year above 80 though near departure odds have eased since Friday DOJ announcement On Polymarket odds of Powell leaving before May 31st have slipped to 43% from 53%, while Calci shows a 51% chance of departure before June 30th, down from a 64% peak on Friday. And Chinese AI startup DeepSeek is offering a 75% discount on its new DeepSeek V4 Pro model through May 5th. The steep price cut intensifies cost competition in the global AI market. The company said it has reduced input cash hit pricing across the API suite to one-tenth of previous levels. The move comes alongside a preview launch of its V4 model family, which includes two variants, V4 Pro, a higher performance premium model, and V4 Flash, a lighter and more cost-efficient version. DeepSeq's V4 models have been adapted to run on Huawei chip technology, underscoring China's push towards domestic hardware ecosystems. The models are designed with AI agent applications in mind. Now here's a look at what's trending on Seeking Alpha. See what the S&P 500 would look like with SpaceX, OpenAI, and Anthropic in it. China blocks Meta's $2 billion takeover of AI company Manus, and Michael's stuns with a $97 million opening powering a strong weekend box office. In pre-market trading, Stock Index Futures are cautious to start the week, with five Magnificent Seven companies reporting earnings and a Fed decision on deck. In geopolitics, after the U.S. opted not to send envoys to Pakistan for Iran peace talks, Tehran has reportedly floated, reopening the Strait of Hormuz while postponing discussions over its nuclear program. And there are no major economic releases to begin the week. That's all for today's Wall Street Breakfast. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com And for a full suite of news, analysis, ratings, and data on stocks and ETFs, go to seekingalpha.com slash subscriptions.