Saturday, May 02, 2020 9:58:42 PM
Published: May 2, 2020 at 9:36 p.m. ET
By Mark DeCambre
‘I was wrong about that business,’ Warren Buffett says of decision to unload stocks in United, American, Delta and Southwest Airlines
Warren Buffett says Berkshire Hathaway dumped all of its holdings in the airline sector, painting a grim picture of the industry that has been badly hurt by the COVID-19 pandemic.
“I was wrong about that business,” Buffett said, speaking on Saturday in Omaha, Neb., at Berkshire’s annual shareholder meeting, which was held virtually due to the deadly disease.
Back in April, Berkshire Hathaway BRK.A, -2.74% BRK.B, -2.50% disclosed that it sold large blocks of stock in Delta Air Lines DAL, -6.90% and Southwest Airlines LUV, -6.46%.
Subsidiaries of Berkshire sold 13 million Delta shares for a total of $314.2 million and 2.3 million Southwest shares amounting to more than $74 million, as he looked to substantially scale back his ownership of the airlines sector which has been devastated by stay-at-home protocols that have been put in place since the coronavirus epidemic took hold of the world over the past three months.
Buffett, however, explained that his company and its subsidiaries have now unloaded their entire stake in airlines.
Buffett explained at the meeting that he thought he was getting roughly 10% of the four largest airlines for an attractive price. He also owned stakes in American Airlines Group Inc. AAL, -11.40% and United Airlines Holdings Inc. UAL, -10.00%. Collectively, those airlines, represent some 80% of the passenger miles flown in the U.S., Buffett said.
But he determined recently that his decision, in light of the emerging pathogen, was ill-advised and he sought to unload his position: “I just decided that I’d made a mistake.”
As of the most recent filings, Berkshire had held 70 million shares of Delta representing 1.7% of the conglomerate’s portfolio, according to data provider Whale Wisdom. Berkshire also had roughly 54 million shares of Southwest, representing 1.2% of its holdings, 22 million shares of United Airlines, representing 0.8% and 42.5 million shares of American Airlines, about 0.5% of Berkshire, according to the site.
“The airline business, and I may be wrong, and I hope I’m wrong, changed in a major way,” he explained, noting that it has been through no fault of the CEOs of the companies. “I’ve been basically told not to fly,” he added, noting that he may not fly commercial going forward.
“I wouldn’t normally talk about it, but I think it requires an explanation,” he said of his decision to discuss selling airline stocks.
“We like those airlines but the world has changed…and I don’t know how it’s changed,” he said.
Shares of Delta, the largest airline by market capitalization, were down 59% in the year to date, United Airlines were off nearly 70% so far this year, Southwest was down by about 46% thus far in 2020, nd American Airlines was off 63% over the same period, as of Friday’s close. An exchange-traded fund that tracks the industry, U.S. Global Jets ETF JETS, -7.24%, was down by more than 55% in the year to date.
By comparison, the Dow Jones Industrial Average DJIA, -2.55% was off 17% so far this year, after recovering much of its March decline in April. The S&P 500 SPX, -2.80% was looking at a year-to-date loss of 12.4% and the Nasdaq Composite Index COMP, -3.20% was down 4.1% so far in 2020.
Airlines received a $25 billion U.S. government bailout back in mid April to prop up the industry
The Trump administration has reached an agreement in principle with major airlines over the terms of a $25 billion bailout to prop up an industry hobbled by the coronavirus pandemic.
Volumes for airlines are down substantially, according to industry groups, with the aircraft and passenger volume down more than 90%, compared with a year ago, according to industry group Airlines for America, and more than 3,000 planes have been idled, constituting about half of the active fleets.
https://www.marketwatch.com/story/buffett-dumps-entire-airline-stake-saying-the-world-changed-for-airlines-2020-05-02?cx_testId=3&cx_testVariant=cx_2&cx_artPos=6#cxrecs_s
follow me on BLUE SKY BREAKOUT
Recent DAL News
- Form SC 13D/A - General Statement of Acquisition of Beneficial Ownership: [Amend] • Edgar (US Regulatory) • 09/24/2024 09:00:02 PM
- Delta Air Lines Announces Webcast of September Quarter 2024 Financial Results • PR Newswire (US) • 09/24/2024 12:45:00 PM
- Nike Shares Surge 7% Pre-Market as Elliott Hill Becomes CEO; FedEx Shares Tumble 13% After Profit Miss • IH Market News • 09/20/2024 10:02:58 AM
- Delta Air Lines Declares Quarterly Dividend • PR Newswire (US) • 09/19/2024 08:30:00 PM
- REGISTRATION OPENS SOON FOR AIRLINE DISTRIBUTION® 2025 • PR Newswire (US) • 09/17/2024 12:00:00 PM
- Intel Secures $3.5 Billion Subsidy, Stellantis Backs EU Emissions Targets, BP and Apollo Reach $1 Billion Deal • IH Market News • 09/16/2024 10:03:27 AM
- OpenAI Unveils Strawberry AI Model Series; Boeing Stock Falls 4% Amid Strike; HR Surges 20% on Growth Forecast • IH Market News • 09/13/2024 10:12:55 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/12/2024 01:00:09 PM
- GameStop plunges 11% on stock offering, DJT drops post-debate, GSK fails shingles vaccine trial • IH Market News • 09/11/2024 10:25:41 AM
- Klarna partners with UATP to tap the $1 trillion air travel industry • PR Newswire (US) • 09/10/2024 12:00:00 PM
- Broadcom Down 10% Post-Earnings, UiPath Up 8%; Qualcomm Eyes Intel Assets; Salesforce Acquires Own Company • IH Market News • 09/06/2024 11:59:00 AM
- Delta Air Lines to Present at the Morgan Stanley Laguna Conference • PR Newswire (US) • 09/05/2024 01:00:00 PM
- Form N-PX - Annual Report of proxy voting record of management investment companies • Edgar (US Regulatory) • 08/30/2024 08:30:03 PM
- High Volatility Expected in Nvidia Report, Ambarella Soars 20%, Hertz Strengthens Board, Apple Cuts Jobs • IH Market News • 08/28/2024 09:50:36 AM
- W2 by GO7 joins the UATP Network as its Newest Issuer • PR Newswire (US) • 08/27/2024 12:00:00 PM
- IBM Closes China Research Division, Uber Fined $324M, Starliner to Return Without Astronauts • IH Market News • 08/26/2024 12:58:21 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/23/2024 01:15:08 PM
- Wego Joins UATP Network, Enhancing Supplier Relationships in MENA Region • PR Newswire (US) • 08/13/2024 12:00:00 PM
- TSMC July Revenue Surges 45%, Nasdaq Accelerates Penny Stock Delistings, Moody’s Downgrades Intel to BAA1, and More • IH Market News • 08/09/2024 09:44:44 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/08/2024 07:00:37 PM
- Intel Sued by Shareholders; JPMorgan Raises Chance of Recession; Roblox Blocked in Turkey; Micron Resumes Share Buyback • IH Market News • 08/08/2024 09:48:43 AM
- Joby Aviation Seeks Australian Certification, Arcadium Lithium Projects Suspended Due to Oversupply, and More • IH Market News • 08/07/2024 09:47:32 AM
- CLEAR announces 4,000,000 block share repurchase agreement with Delta Airlines and $100 million increase to share repurchase authorization • PR Newswire (US) • 08/05/2024 10:00:00 AM
- Nvidia AI Chip Delays, Mars Eyes Kellanova Acquisition, Berkshire Hathaway’s Cash Surge to $277 Billion • IH Market News • 08/05/2024 09:43:55 AM
Lingerie Fighting Championships Signs Broadcast Deal With Maybacks Global Entertainment • BOTY • Sep 26, 2024 9:00 AM
Maybacks Global Entertainment and Lingerie Fighting Championships Enter Into Broadcast And Revenue Sharing Agreement • AHRO • Sep 26, 2024 8:30 AM
North Bay Resources Commences Operations at Bishop Gold Mill, Inyo County, California; Engages Sabean Group Management Consulting • NBRI • Sep 25, 2024 9:15 AM
CEO David B. Dorwart Anticipates a Bright Future at Good Gaming Inc. Through His Most Recent Shareholder Update • GMER • Sep 25, 2024 8:30 AM
Cannabix Technologies and Omega Laboratories Inc. Advance Marijuana Breathalyzer Technology - Dr. Bruce Goldberger to Present at Society of Forensic Toxicologists Conference • BLOZF • Sep 24, 2024 8:50 AM
Integrated Ventures, Inc Announces Strategic Partnership For GLP-1 (Semaglutide) Procurement Through MedWell USA, LLC. • INTV • Sep 24, 2024 8:45 AM