33 F
Fort Worth
Friday, December 4, 2020
Banking Airlines rise to a record as Buffett's Berkshire deepens bet

Airlines rise to a record as Buffett’s Berkshire deepens bet

Other News

Exxon’s oil slick

Exxon Mobil is slashing its capital spending budget for 2020 by 30% due to weak demand caused by the COVID-19 pandemic and a market...

Folk music’s Mark Twain: 7 Essential tracks from John Prine,

NEW YORK (AP) — Some people, the songs just come out of them. For nearly half a century, they tumbled out of John Prine...

Tarrant County records another COVID-19 death

Tarrant County Public Health (TCPH) on Wednesday, April 8 reported that a resident of Euless has died as the result of the COVID-19 virus....

Tradition stymied: A year unlike any since WWII for Augusta

The Masters is so intertwined with Augusta, they added an extra day to spring break.You see, the first full week of April isn't just...

Airlines climbed to a record after Warren Buffett’s Berkshire Hathaway Inc. increased its stakes in the four biggest U.S. carriers, adding to a bet that industry consolidation will end the boom-and-bust cycles the billionaire long shunned.

Berkshire’s latest purchases made it the largest shareholder in Delta Air Lines and United Continental Holdings, and No. 2 in American Airlines and Southwest Airlines. The holdings represent one of the biggest common-stock investments in years for the company controlled by Buffett, who once called airlines “a death trap for investors.”

The six biggest U.S. carriers — bolstered by lower jet-fuel prices and years of dealmaking that left fewer major competitors — posted their fifth straight year of profits in 2016, earning about $14 billion on an adjusted basis, according to data compiled by Bloomberg. That helped soften memories of the previous decade, in which losses surpassed $50 billion.

“While some longer-term investors have recognized the positive structural and behavioral industry changes for years now, these investments provide further validation,” Duane Pfennigwerth, an analyst at Evercore ISI, said in a note to clients Wednesday. He called Berkshire’s change of heart on airlines “one of the biggest pivots in the history of investing.”

The Bloomberg U.S. Airlines Index rose 2 percent at 1:20 p.m. in New York after advancing as much as 3.4 percent to the highest level on record. Southwest led major carriers, rising 3.1 percent to $57.06. All 11 members of the index posted gains.

Berkshire’s stakes in American, Delta and United increased to more than $2 billion each, according to a U.S. regulatory filing Tuesday. Buffett’s Omaha, Nebraska-based investment company also disclosed a holding in Southwest valued at about $2.2 billion as of Dec. 31.

American’s chief executive officer, Doug Parker, helped win over Buffett lieutenant Ted Weschler last year with his argument that a transformed airline industry was poised for steady returns, Bloomberg News reported this month.

By controlling expansion and better matching the supply of seats and flights with demand, airlines “are behaving in a way that is positive for shareholders,” said Jim Corridore, a CFRA Research analyst.

“They do not look to expand at any cost, they’re not each looking to be thebiggest carrier,” he said in an interview. “They’re looking to be the most profitable, and this has changed their strategy.”


Oh hi there 👋 It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.


Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.

Latest News

MedStar and Texas Health Resources to donate ambulance and supplies to Fort Worth Sister City Toluca, Mexico

Toluca, Mexico, capital of the State of Mexico, is the center of a rapidly growing urban area and the fifth-largest city in Mexico, home...

Automakers prep for stronger mileage standards under Biden

DETROIT (AP) — Now that it’s clear Joe Biden soon will be president, the fight over automobile pollution and fuel efficiency standards is likely...

Texas Trust appoints Chief Growth Officer

Texas Trust Credit Union has appointed Ron Smith to the new role of Chief Growth Officer, charged with developing and executing data-driven strategies to...

Alto partners with Toys for Tots as ‘On Demand’ Santa returns

Alto announces partnership With Toys For Tots, return of on-demand Santa Alto, a Dallas-based rideshare and delivery company, has announced it will partner with national...

GM walks away from stake in electric vehicle maker Nikola

NEW YORK (AP) — General Motors will not take an initial stake in the electric vehicle company Nikola, which announced Monday that it would...