Will Warren Buffett Buy an Airline? Or Is He Looking to Sell?

In late 2016, investors were shocked to learn that Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) had invested in the four largest U.S. airlines: American Airlines (NASDAQ: AAL), Delta Air Lines (NYSE: DAL), United Airlines (NASDAQ: UAL), and Southwest Airlines (NYSE: LUV). True, the U.S. airline industry had turned in several years of strong earnings at that point. However, Buffett had been burned before from investing in the airline industry and had been warning investors about the danger of investing in airlines for two decades.

Today, Berkshire Hathaway owns stakes of roughly 10% in all four of these airlines -- slightly more for Delta; slightly less for the others. As of a few months ago, its airline investments had done fairly well. Its top three airline holdings -- Delta, Southwest, and United -- ended 2019 with a combined market value of $8.6 billion, 37% ahead of Berkshire's cost basis. But since then, the COVID-19 pandemic has caused air travel to crater, crushing airline stocks.