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Buffett - Invests $8B In the Airline industry - AAL, LUV, DAL, UAL
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Loading...This week Berkshire Hathaway, regulatory filings came out showing investments in the Airline industry.
Increasing its share in Delta and American Airlines and buying shares in Southwest Airlines. Based on the filling Buffett bought $2.2Bln in Southwest Airlines and owns around $2Bln. in American, Delta and United Airlines, as a total of $8B.
During 2013 in a company press conference Buffett said that the Airline Industry is like "Death trap" for investors. What changed?
First the price of Oil is 50% cheaper in 2017 than in 2013. The Fuel is the biggest cost outlay for Airline companies and with costs lower by 50% they had much better financial results in the last 2 years.
In addition to that American, Delta and United were making investments in cabin seats and connectivity, much better experience for the Business Clients. Overall, much more luxury, better connectivity and more efficient travel.
Now in 2017 the big four Airlines are in a much better position than during the 2013, as then 3 of them were conducting mergers with rivals and there were uncertainties for the sector. Delta is one of the biggest and most profitable Airlines in the World. Southwest completed its merger with Air Trans without any big issues.
The industry does remain with issues and negative factors, as the competition has risen by low-budget small airlines from Asia and the Middle East. Lower sales of transatlantic flights due to the slow down in the global economies and more specifically China.
Overall even with these barriers, American, Delta, United and Southwest do remain the biggest in the sector and most profitable that is why Buffett continued with investing in them.
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