Warren Buffett’s Berkshire Hathaway Inc. has sold all stakes in four major U.S. airlines, noting that the airline industry has changed due to coronavirus or Covid-19 pandemic.
The company reportedly sold around 10 percent stake in each of American Airlines Group Inc., United Airlines Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co.
During the virtual annual meeting with the shareholders on Saturday, Berkshire Hathaway’s Chairman and CEO called the recent purchase of the stakes in these companies an understandable mistake.
Buffett said, “I just decided that I made a mistake in valuing… The companies we bought were well-managed… I don’t know whether two or three years from now that as many people will fly as many passenger miles as they did.”
Buffett added that the airline business has changed in a very major way and that the future is much less clear to him how the business will turn out through absolutely no fault of the airlines themselves.
Amid the covid-19 crisis, the value of plane makers as well as major U.S. carriers has reduced significantly as majority of the countries across the world have banned air travel and plane makers ceased production.
In the U.S., the number of passengers traveling are down about 95 percent from the prior year.
On March 1, the U.S. Transportation Safety Administration reported scanning nearly 2.3 million passengers, while after the stay at home orders, the agency scanned 129,763 passengers on April 3.
Meanwhile, Berkshire continues to own all stake in Precision Castparts Corp., a supplier of aerospace parts. The stake was bought in 2016 in a deal valued at $37.2 billion.
Berkshire’s vice chairman for non-insurance operations, Greg Abel, acknowledged at the meeting that even though Precision Castparts was getting hit as its business is largely connected to Boeing, its defense business remained strong. The company is said to be working to adjust the business to meet current demand.
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