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'Big 4' airline stocks plummet after Warren Buffett revealed that Berkshire Hathaway dumped them in April

Warren Buffett
  • The "big four" US airline stocks plummeted on Monday.
  • Warren Buffett sold his roughly 10% stakes in American, Delta, United, and Southwest in April, he revealed during Berkshire Hathaway's annual meeting on Saturday.
  • "Our airline position was a mistake," the famed investor said. "Berkshire is worth less today because I took that position than if I hadn't."
  • Buffett questioned whether passenger numbers will rebound and pointed to the carriers' government bailout deals, stating that "the world has changed for airlines."
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Shares in the "big four" US airlines plunged in pre-market trading on Monday after Warren Buffett revealed on Saturday that his Berkshire Hathaway conglomerate had dumped its stakes in them.
American Airlines,  Delta Air Lines, and United Airlines were down more than 8.5% as of 10:35 a.m. in New York, while Southwest Airlines declined about 7%.
Berkshire sold its roughly 10% stake in all four carriers in April, Buffett revealed at the company's annual meeting on Saturday.
"Our airline position was a mistake," the billionaire investor said. "Berkshire is worth less today because I took that position than if I hadn't."
Buffett estimated that Berkshire spent $7-8 billion establishing the positions in 2016, and ended up "selling them at far lower prices than we paid." He attributed the company's $6.1 billion in net stock sales in April to the disposals.
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The Berkshire CEO ditched the airlines because he wasn't sure that passenger numbers would fully recover from the coronavirus pandemic in the coming years. He feared that "too many planes" would drive down seat prices and hurt airlines' earnings.
Buffett also highlighted the carriers' recent bailout deals, which require them to repay billions of dollars in loans and effectively hand over equity to the government that it will sell when their stock prices bounce back.
"The world has changed for the airlines," Buffett said at the meeting. "The future is much less clear to me about how the business will turn out."
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