Warren Buffett, the billionaire chief executive of Berkshire Hathaway, has sold off all his shares in US airlines as the industry loses billions and sheds tens of thousands of jobs.
Buffett, whose conglomerate had avoided the airline industry but began building stakes in key carriers in 2016, told investors the sector looked set to “chew up” money as Berkshire Hathaway reported a US$50bn net loss.
Berkshire Hathaway had built up shareholdings in four major airlines and was a top three shareholder after acquiring an 11 per cent stake in Delta, 10 per cent of American Airlines, 10 per cent of Southwest Airlines and 9 per cent of United Airlines.
Buffett said he expected each of the airlines would need to borrow more than US$10bn to survive the crisis.
Berkshire Hathaway, which operates primarily as a holding company with shareholdings across sectors, warned most of its businesses had been negatively affected by the pandemic‘s downturn.
Despite the downturn, the conglomerate‘s cash pile swelled to US$137bn. The company has been holding off on new acquisitions since the downturn, unlike during the 2008 financial crisis, when it went on a buying spree.
Analysts warned his unwillingness to invest suggested he believed the market had further to fall.
Berkshire Hathaway‘s investor conference normally attracts tens of thousands of shareholders to its base in Omaha, Nebraska.
This time, Buffett, 89, addressed investors via video link.
Late on Saturday, Buffett told a virtual meeting of investors: “We made that decision in terms of the airline business. We took money out of the business basically even at a substantial loss.”
He added: “The world changed for airlines and we wish them well.”