Warren Buffett Dumps US Airline Stocks Amid Coronavirus
Amid the coronavirus crisis, billionaire investor Warren Buffett says his company Berkshire Hathaway has sold off all of its US airline stocks. The company owned shares in the world’s four largest airlines, Delta (11%), American (10%), Southwest (10%) and United (9%).
Hours after Berkshire Hathaway announced a record $50B net first quarter loss, Buffett addressed shareholders on Saturday; detailing his mistake in investing into the airline industry, a move he first made in 2016 after avoiding for years. He says, “The world changed for airlines. It turned out that I was wrong about that business because of something that was not in any way the fault of four excellent CEOs.”
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Further explaining his move to pull out, he says, “We made that decision in terms of the airline business. We took money out of the business basically even at a substantial loss. We will not fund a company that… where we think that it is going to chew up money in the future. It is a blow to have, essentially, your demand dry up. It is basically that we shut off air travel in this country.”
Buffett does note that, ultimately, it is not the airlines’ faults. He says, “But the companies we bought were well managed. They did a lot of things right. It’s a very, very, very difficult business because you’re dealing with millions of people every day and if something goes wrong for 1% of them, they are very unhappy. I don’t know whether two or three years from now that as many people will fly as many passenger miles as they did last year. They may and they may not, but the future is much less clear to me about how the business will turn out through absolutely no fault of the airlines themselves.”
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