Warren Buffett has sold out of airline stocks

Warren Buffett has sold out of airline stocks 1
Warren Buffett has sold out of airline stocks 1

At the 2020 online general meeting of shareholders of Berkshire Hathaway Group on May 2, Warren Buffett said he had sold shares of the four largest airlines in the US, Delta Air Lines, United Airlines, Southwest Airlines and

Billionaire Warren Buffett conducts the 2020 annual general meeting of shareholders online. Photo: Bloomberg

By the end of December 2019, Berkshire owned 10% of American Airlines (equivalent to 42.5 million shares);

The billionaire said that the aviation industry has `fundamentally changed` because of Covid-19, as it is the industry most heavily impacted by the epidemic due to global travel restrictions.

Berkshire started pouring capital into US airlines in 2016, and this investment brought record profits to the group a few years later.

Last month, US airlines began receiving $25 billion in federal grants and loans on the condition that they do not lay off or cut employee salaries until September. However, the reality cannot be denied.

After divesting from the aviation sector, Warren Buffett said, Berkshire’s revenue may be less, but the shares that this group invests in the insurance, railways, and energy sectors are starting to show signs of improvement.

Whether or not to buy stocks at this time is a headache for many investors.

This time, instead of buying, Warren Buffett is doing the opposite.

With this move, Berkshire’s boss said that now is not the right time to buy stocks, and warned of the negative effects that the pandemic will have on investment fields.

Even so, Warren Buffett remains optimistic, believing that America will overcome the crisis spectacularly.

`I remain convinced that nothing can fundamentally stop America,` said billionaire Buffett.

Buffett said the current crisis is very different from the 2008 financial crisis, in part because the banking industry is in better shape and is not the source of the problem.

Believing in the ability of the US economy to recover over time, the 89-year-old billionaire believes that it will be difficult to predict anything given the unusual movements of the stock market today.

Right before this online General Meeting of Shareholders, Berkshire reported a loss of nearly 50 billion USD in the first quarter. Even though quarterly profits increased by 6%, the shares of some large businesses, including railway company BNSF, still lost value.

In the first quarter of 2020, Berkshire bought $1.7 billion in treasury shares, while spending up to $2.2 billion in the last quarter of 2019. Since the beginning of the year, the price of Berkshire’s Class A shares has decreased.

For many years, Warren Buffett has always looked for investments with high profit potential, such as large mergers and acquisitions deals.

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