At the beginning of this year, Buffetts Berkshire Hathaway owned 8% - 11% of the four major U.S. airlines (American Airlines, Delta, Southwest Airlines and United Airlines). But at last months annual general meeting, Buffett announced that he would reduce his stake in aviation stocks, which caused public criticism because it was contrary to earlier statements.
As for the logic of the reduction, Buffett said he is not sure that there will be a significant rebound in the number of airline passengers in the next few years, and the airline may already have too many planes. In addition, the airlines will have to pay back the huge loans they received from the government earlier.
As part of the bailout act, the U.S. government has the right to convert debt into equity at a fixed price. Southwest Airlines and United Airlines also issued new shares to raise funds. Buffett said he couldnt see the future of the airline.
As of the publication, the four major American Airlines rose collectively after opening on Friday, down 20% - 50% from the beginning of this year.
(daily trend of four major American Airlines, source: tradingview)
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