Passengers may hate airlines, but investors love them (even United)

[NewsFeeder]

Passengers may hate airlines, but investors love them (even United)

Airline stocks have soared over the past five years and valuations are still cheap

http://finance.yahoo.com/r/8b6b015d-274d-37bb-8555-70bcb63ca4a6/Story.aspx?guid=E0BF994A-1EBA-11E7-8294-534DD63C3500&siteid=yhoof2&yptr=yahoo&.tsrc=rss

[Bullitt]

Prices have been cut in half, but valuations likely haven't changed.


Warren Buffett, after years of deriding airlines, became a fan, amassing an 11% ownership stake in Delta and 9% of Southwest at the end of 2019, worth nearly $5 billion, through his holding company Berkshire Hathaway (https://www.barrons.com/quote/BRK.B) (BRK.B). He said on Friday (https://finance.yahoo.com/news/warren-buffett-i-wont-be-selling-airline-stocks-142849303.html?soc_src=social-sh&soc_trk=tw&mod=article_inline) that he won’t be selling any of his airline stocks.

https://www.barrons.com/articles/coronavirus-rout-airline-industry-stocks-51584143609?


According to recent filings with the Securities and Exchange Commission (https://www.sec.gov/Archives/edgar/data/1067983/000095012320002466/xslForm13F_X01/form13fInfoTable.xml), Buffett’s Berkshire Hathaway (BRK-A (https://finance.yahoo.com/quote/BRK-A), BRK-B (https://finance.yahoo.com/quote/BRK-B)) holds large stakes in several airlines: more than 53 million shares of Southwest (LUV) (https://finance.yahoo.com/quote/LUV?p=LUV&.tsrc=fin-srch), 42 million shares of American (AAL) (https://finance.yahoo.com/quote/AAL?p=AAL&.tsrc=fin-srch), 21.9 million shares of United (UAL (https://finance.yahoo.com/quote/UAL?p=UAL&.tsrc=fin-srch)), and 71.8 million shares of Delta (DAL) (https://finance.yahoo.com/quote/DAL?p=DAL&.tsrc=fin-srch) after buying almost a million new shares (https://www.sec.gov/Archives/edgar/data/27904/000120919120014758/xslF345X03/doc4.xml)two weeks ago.


Berkshire Hathaway purchased the additional 976,000 shares of Delta (https://finance.yahoo.com/news/berkshire-boosts-delta-air-stake-002531707.html) at about $46 a share on February 27th. At the close of trading Thursday March 12th, Delta shares had fallen roughly 27.5% in just two weeks driven down by coronavirus related cuts in capacity and reservations.

https://finance.yahoo.com/news/warren-buffett-i-wont-be-selling-airline-stocks-142849303.html

[Bullitt]

The biggest US airlines blew 97% of their free cash flow on stock buybacks since 2010. Now they are asking for a bailout.

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[Bullitt]

The flights were probably comfortable for those who had to fly in April. No worrying about everyone being anxious to board and stuff their overhead compartment. Will be interesting to see how this one looks post-panic.


Delta is halting flights to Chicago Midway; Oakland International Airport; Hollywood Burbank; Long Beach; Providence, R.I., Westchester County Airport; Stewart International; Akron-Canton, Ohio; Manchester, N.H. and Newport News/Williamsburg until at least September.

Delta is cutting flights by 85% in the second quarter and seeking permission from U.S. regulators to suspend flights to nine other cities that could be served by other airports, including three Michigan cities.

Delta says between April 1-April 22, just one to 14 passengers daily flew on the airline’s planes each way from those nine airports.

https://www.reuters.com/article/us-health-coronavirus-delta-air/delta-will-suspend-service-to-10-us-airports-starting-may-13-idUSKBN22K2PJ

[Bullitt]

UAL, first close above 50 DMA since December 2019 after breaking out from a declining trendline on huge volume spike.

46242

[Bullitt]

Not a fan, but UAL made a second breakout this week. Transports still trending up.

46694