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Buffett Doesn’t Regret Selling Airline Stocks Last Year — And He Still Doesn’t Want To Invest In Them

Topline

Berkshire Hathaway CEO Warren Buffett defended his decision to sell the company’s airline holdings last year even though those stocks have surged off their lows, telling investors at Berkshire’s annual meeting Saturday that the travel industry remains in a precarious position, and he thinks federal officials may not have bailed out the airlines if the deep-pocketed investor had maintained a sizable stake in any of them.

Key Facts

At last year’s annual meeting, after Covid-19 restrictions had hobbled the airline industry, Buffett disclosed that Berkshire Hathaway had sold its multibillion-dollar stakes in the four major U.S. airlines, but all four companies’ share prices have rebounded strongly — Delta is up 168% since its low last spring, American is up 163% and United is up 199%.

Despite this trend, Buffett argued Saturday the future of air travel is still uncertain because of the coronavirus, especially international and business travel, telling investors in a live-streamed address he “still wouldn’t want to buy the airline business.”

Buffett also suggested Congress would have been less likely to approve the billions in aid it’s provided for airlines if a prominent investor like Berkshire Hathaway had maintained a large position in airline shares: “I can just see the headlines now,” Buffett said.

Key Background

Berkshire Hathaway once owned 9% to 11% stakes in American, Delta, United and Southwest Airlines. But last spring, the Omaha-based conglomerate sold these holdings for far less than the $7 billion to $8 billion it had paid for them, and Buffett called his decision to invest in air travel a “mistake,” arguing it could take years for airlines to fully recover from Covid-19. Berkshire Hathaway also decreased its stake in JPMorgan Chase and Goldman Sachs last year. Some investors challenged Buffett for these choices Saturday, suggesting Berkshire Hathaway was unnecessarily cautious.

Crucial Quote

“I don’t consider it a great moment in Berkshire’s history, but we have more net worth than any company on Earth,” Buffett told investors.

Further Reading

Buffett Sells More Stocks, Including Goldman Sachs, With No ‘Elephant-Sized’ Acquisition On The Horizon (Forbes)