In coronavirus pandemic, Warren Buffett sells some Delta, Southwest airlines stock
Shares of both airlines plunged in after-hours trading Friday
Smead Capital Management founder Bill Smead discusses where Berkshire Hathaway CEO Warren Buffett may find opportunities during the coronavirus pandemic and whether Buffett is buying on the market's worst days.
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Billionaire investor Warren Buffett unloaded significant stakes in Delta Air Lines and Southwest Airlines as the industry contends with unprecedented headwinds related to the coronavirus pandemic, according to SEC filings on Friday.
Buffett’s holding firm, Berkshire Hathway, sold nearly 13 million shares of Delta, or about 18 percent of its overall stake in the airline. The share sales were worth about $314 million.
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The firm also sold about 2.3 million shares of Southwest Airlines, or about 4 percent of its stake. The shares were worth about $74 million.
Treasury Secretary Steven Mnuchin says airlines must keep all of their employees and explains that the money they receive will be allocated toward paying them.
Delta shares plunged more than 11 percent in after-hours trading on Friday. Southwest Airlines shares fell nearly 5 percent after market close.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DAL | DELTA AIR LINES INC. | 64.03 | -0.81 | -1.24% |
| LUV | SOUTHWEST AIRLINES CO. | 32.59 | +0.17 | +0.54% |
The transactions occurred as U.S. airlines experience significant declines in flight traffic due to the pandemic. Authorities in the U.S. and abroad have enacted sweeping travel restrictions and urged citizens to stay home, forcing airlines to make broad cuts to their normal flight capacity.
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Berkshire Hathaway holds significant stakes in Delta, Southwest, United Airlines and American Airlines. The filings did not say why Buffett’s firm opted to sell stock.
Congressional lawmakers passed a $2.2 trillion coronavirus stimulus package last month that included financial relief for U.S. airlines. The measures helped airlines avoid significant layoffs in the short term.
However, airline executives have warned in recent days that business is unlikely to improve any time soon. In a letter to employees published Friday, Delta CEO Ed Bastian said the airline is burning more than $60 million per day and expected second-quarter revenue to be down by 90 percent.