US airline stocks tumble after Buffett sells whole stakes

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A Delta Air Lines jet taxis passes Southwest Airlines jets to be parked with a growing number of jets at Southern California Logistics Airport (SCLA) on March 24, 2020 in Victorville, California.

David McNew | Getty Images

U.S. airline shares were down sharply again on Monday after Warren Buffett over the weekend said Berkshire Hathaway sold its entire stakes in the four largest U.S. carriers as coronavirus devastates travel demand.

Berkshire was among the largest investors in the four — American, DeltaSouthwest and United — but on Saturday he announced the firm dumped those shares. Berkshire posted a net loss of close to $50 billion in the first three months of the year.

American and United shares were each down more than 12% in premarket trading. Delta was down more than 11% and Southwest was off about 10%.

Buffett had long shunned airlines and in a 2007 shareholder letter said investors in those businesses “poured money into a bottomless pit, attracted by growth when they should have been repelled by it.”

But he returned in 2016 with a surprise bet on the four biggest U.S. carriers as the industry was enjoying steady profits and the benefits of strong travel demand and lower fuel costs than in previous years.

Those four airlines last month posted their first quarterly losses in years and warned of a slow recovery in demand from pre-pandemic levels. Delta’s CEO said it could take two to three years.

“I mean, believe me, no joy being a CEO of an airline,” Buffett said at Berkshire’s annual meeting, which was webcast because of the pandemic. “But the companies we bought were well managed. They did a lot of things right.”

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