Here's what Mr. Buffet told Fortune magazine: in 1999
...Move on to failures of airlines. Here’s a list of 129 airlines that in the past 20 years filed for bankruptcy. Continental was smart enough to make that list twice. As of 1992, in fact--though the picture would have improved since then--the money that had been made since the dawn of aviation by all of this country’s airline companies was zero.Mr. Buffett repeated the sentiment on the 2003 centenary of Orville's first flight.
Absolutely zero.
I like to think that if I’d been at Kitty Hawk in 1903 when Orville Wright took off, I would have been farsighted enough, and public-spirited enough--I owed this to future capitalists--to shoot him down. I mean, Karl Marx couldn’t have done as much damage to capitalists as Orville did.
Then in the 2007 Chairman's letter to the shareholders of Berkshire Hathaway he wrote (pp 8):
...Now let’s move to the gruesome. The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk , he would have done his successors a huge favor by shooting Orville down. The airline industry’s demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.And now he defends holding them?
And I, to my shame, participated in this foolishness when I had Berkshire buy U.S. Air preferred stock in 1989. As the ink was drying on our check, the company went into a tailspin, and before long our preferred dividend was no longer being paid. But we then got very lucky. In one of the recurrent, but always misguided, bursts of optimism for airlines, we were actually able to sell our shares in 1998 for a hefty gain. In the decade following our sale, the company went bankrupt. Twice.
To sum up, think of three types of “savings accounts.” The great one pays an extraordinarily high interest rate that will rise as the years pass. The good one pays an attractive rate of interest that will be earned also on deposits that are added. Finally, the gruesome account both pays an inadequate interest rate and requires you to keep adding money at those disappointing returns....
Here's Yahoo Finance with a pretty good interview despite the conclusion being wildly at variance with our thinking:
Warren Buffett likes airline stocks despite the recent dramatic sell off so don’t expect Buffett to dump his shares.“I won’t be selling airline stocks,” he told Yahoo Finance editor-in-chief Andy Serwer this week.According to recent filings with the Securities and Exchange Commission, Buffett’s Berkshire Hathaway (BRK-A, BRK-B) holds large stakes in several airlines: more than 53 million shares of Southwest (LUV), 42 million shares of American (AAL), 21.9 million shares of United (UAL), and 71.8 million shares of Delta (DAL) after buying almost a million new shares two weeks ago.
Berkshire Hathaway purchased the additional 976,000 shares of Delta at about $46 a share on February 27th. At the close of trading Thursday March 12th, Delta shares had fallen roughly 27.5% in just two weeks driven down by coronavirus related cuts in capacity and reservations.“Well, it’s going to be terrible. I’ve always felt a pandemic would happen at some time,” Buffett said. He’s long suspected a pandemic could interrupt progress in the United States and globally. But Buffett predicts ultimately, “It won’t stop the progress of the country or the world.”...
....MUCH MORE
Here's the only pure-play airline ETF if you have an interest long or short:
