Warren Buffett’s company, Berkshire Hathaway, sold all of its stakes in the four largest US airlines due to the coronavirus crisis.
Speaking at the company’s annual meeting, the business tycoon said “the world has changed” for the aviation industry due to globalization pandemic.
He also revealed that he made the wrong decision by investing billions of dollars in the aviation industry.
Berkshire Hathaway, a multinational conglomerate based in Nebraska, had held important positions in the airlines.
According to documents filed by the company, it owned 11% of the capital of Delta Air Lines, 10% of American Airlines Co, 10% of Southwest Airlines Co and 9% of United Airlines in late 2019.
The company was also one of the largest individual owners of the four airlines, and in 2016 revealed that it had started investing in the four carriers after avoiding the aviation industry for years.
Buffett said, “We made this decision with regard to the airlines. We withdrew money from the business essentially even at a substantial loss.
“We will not finance a business … where we think it will chew money in the future. “
the coronavirus The pandemic has caused airline stocks to be deeply affected by the near collapse in travel demand to the United States, as countries around the world remain stranded.
US airlines have cut hundreds of thousands of flights and parked their planes while demand for travel to the United States has fallen by about 95%.
There is currently no clear timetable for the return of travel to pre-crisis levels.
Berkshire Hathaway revealed last month that it had sold about 18% of its stake in Delta and 4% of its shares in the South West.
Buffett said Berkshire made the mistake of investing in around $ 7 billion (£ 5.5 billion) or $ 8 billion (£ 6.3 billion) by accumulating stakes in the four companies airlines, including American Airlines Group Inc.
He said, “We haven’t gotten anything like $ 7 billion or $ 8 billion, and that’s my mistake.
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“It was I who made the decision. “
The billionaire investor said he had previously considered investing in other airlines.
“It’s a big blow to basically have your demand dried up… it’s basically that we are stopping air travel in this country,” he added.
Southwest, American and United declined to comment.
Delta said in a statement that it was aware of the sale and had “immense respect for Mr. Buffett and the Berkshire team.”
The Saturday press conference, Secretary of Housing Robert Jenrick, said the government wanted to support the aviation sector “in any way possible.”
He said the industry “is grappling with what long-term demand for its services may be at a time when social distancing will be significant and business travel, for example, may be different.”