{"id":143853,"date":"2020-05-04T22:50:50","date_gmt":"2020-05-04T22:50:50","guid":{"rendered":"https:\/\/www.bnreport.com\/airlines-have-too-many-planes-says-warren-buffett\/"},"modified":"2020-05-04T22:50:50","modified_gmt":"2020-05-04T22:50:50","slug":"airlines-have-too-many-planes-says-warren-buffett","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/airlines-have-too-many-planes-says-warren-buffett\/","title":{"rendered":"Airlines have \u2018too many planes\u2019 says Warren Buffett"},"content":{"rendered":"

US investment guru Warren Buffett sold all his airline shares last month and the explanation he provided over the weekend may have repercussions on this side of the Atlantic.<\/p>\n

In short, the coronavirus pandemic means \u201cthere are too many planes\u201d, said Buffett, the chairman and chief executive of Berkshire Hathaway<\/a> Inc (NYSE:BRK.A), as he reported a US$49.7bn first-quarter loss at the companys first online-only annual shareholder meeting.<\/p>\n

Berkshire Hathaway<\/a> sold its entire holdings of American Airlines, Delta Airlines, Southwest Airlines<\/a> and United Airlines, , recouping only around US$6.5bn of an original investment of \u201cbetween US$7bn and US$8bn\u201d to buy about 10% of the four airlines.<\/p>\n

\u201cIt turned out I was wrong about that business\u201d, said the Sage of Omaha, the fifth richest person in the world, explaining that the pandemic had created new dynamics for the airline industry.<\/p>\n

\u201cIts obviously changed in the fact that the four companies are each going to borrow perhaps an average of at least $10bn or $12bn each,\u201d Buffett said.<\/p>\n

\u201cYou have to pay that back out of earnings over some period of time.\u201d<\/p>\n

He then added: \u201cThe airline business has the problem that if the business comes back 70% or 80%, the aircraft dont disappear.<\/p>\n

Youve got too many planes.\u201d<\/p>\n

Shares in the US airlines tanked, as did aeroplane makers Boeing (NYSE:BA<\/a>) and Airbus.<\/p>\n

London-listed peers also swooped lower, with easyJet (LON:EZJ<\/a>) diving 9%, IAG (LON:IAG<\/a>) 5% and Ryanair (LON:RYA<\/a>) also 5%. Their shares are around two-thirds lower since the start of the year.<\/p>\n

His argument ties in with that of easyJet founder and major shareholder Stelios Haji-Ioannou, who has been railing against the budget airline for not terminating a \u00a34.5bn aeroplane orders from Airbus<\/a><\/strong>.<\/p>\n

The FTSE 100 airline, which has borrowed \u00a3600mln as part of the governments coronavirus support scheme, said it is currently spending around \u00a330-40mln of its cash pile per week, even with its entire fleet grounded.<\/p>\n

When flights are resumed and remain subject to social distancing measures or lack of demand, Haji-Ioannou said the cash burn will be higher current levels as flying half-empty planes \u201cwill be heavily loss making\u201d.<\/p>\n

Haji-Ioannou, a 34% shareholder, has called a shareholder meeting for 22 May to Read More \u2013 Source<\/a><\/strong>
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\n <\/p>\n

Proactiveinvestors<\/a><\/h5>\n

[contfnewc]
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US investment guru Warren Buffett sold all his airline shares last month and the explanation he prov..<\/p>\n","protected":false},"author":1,"featured_media":143854,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[],"class_list":["post-143853","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics"],"yoast_head":"\nAirlines have \u2018too many planes\u2019 says Warren Buffett - Business News Report<\/title>\n<meta name=\"description\" content=\"US investment guru Warren Buffett sold all his airline shares last month and the explanation he prov..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/airlines-have-too-many-planes-says-warren-buffett\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Airlines have \u2018too many planes\u2019 says Warren Buffett - 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