What awaits the airline after the crisis: Warren Buffett’s opinion

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Stocks of airlines around the world are falling in price amid restrictions associated with the coronavirus pandemic. Even in the USA, where the population traditionally travels very actively inside the country, the securities of the largest air carriers are falling in price.

The situation is aggravated by the fact that major investors no longer believe in the rapid recovery of the industry after the global quarantine. In early May, the Berkshire Hathaway investment company got rid of the shares of US carriers.

What happened

In early May, a meeting of shareholders of Berkshire Hathaway was held. The largest shareholder of the investment company is the famous American billionaire Warren Buffet. It was he who initiated the withdrawal of airline securities from his portfolio.

In the first quarter of 2020, Berkshire Hathaway received a loss of approximately $ 50 billion. One of the reasons for such a large loss was the shareholding of four Delta Air Lines, Southwest Airlines, American Airlines and United Airlines – all of which have continued to fall in price since the pandemic began.

As a result, it was decided to completely sell all shares in the airlines. Withdrawal of their capital, Warren Buffett, even more collapsed shares – on the day of the announcement, they fell in price by 7-9%.

Airline prospects

According to Warren Buffett, the air travel industry will change dramatically after the coronavirus pandemic. The investor said that he has no idea how people will travel after quarantine is lifted, which will reflect the change in their habits. In any case, this will lead to a drop in profits and increased costs for airlines.

At the same time, earlier, Buffett did not exclude the possibility of becoming the owner of any of the airlines. But after investments in the aviation sector brought such large-scale losses to his investment companies, his opinion has seriously changed.

[Что касается] aviation business – I could be wrong and hope so – but it seems to me that the epidemic has changed it very, very seriously.

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