Legendary investor Warren Buffett has dumped US airline stocks after his firm Berkshire Hathaway posted $49.75 billion in losses in the first quarter of the year.
Berkshire Hathaway has sold the firm’s entire holdings in the four major U.S. airlines. Buffett warned investors the “world has changed” for the aviation industry in response to the ongoing coronavirus pandemic.
Buffett continued, saying the economic shock of the outbreak will have an “extraordinarily wide” range of possible outcomes for the market, including the impact on his own investment firm. In a regulatory filing, Berkshire revealed $49.75 billion in losses through the first quarter of the year. The company attributed the losses primarily to the massive drop in its investments and businesses as a result of the COVID-19 pandemic.
Berkshire Hathaway operates various businesses deemed essential, including in the transportation, insurance, energy, and utility sectors. These saw their activity slow down, while retail, manufacturing, and service businesses of the conglomerate were heavily impacted.
Per Buffett restaurants and entertainment venues were shuttered, forcing Berkshire to protect its stakes by grant leaves for employees and cutting salaries and capital spending plans. Buffett was quoted as saying:
While we believe that these necessary actions are temporary, we cannot reliably predict when business activities at our numerous and diverse operations will normalize. We also cannot predict how these events will alter the future consumption patterns of consumers and businesses we serve.
Speaking in a virtual annual meeting from his home in Omaha, Nebraska, Buffett told shareholders the company’s withdrawal from the airline business had come at a substanial loss.
We made that decision in terms of the airline business. We took money out of the business basically even at a substantial loss.
Buffett continued, saying Berkshire refused to fund a company they think will “chew up money” in the future.
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