Will Warren Buffett Buy an Airline?

I am quoted in a Bloomberg article: “Buffett’s Course Reversal on Airlines Sparks Talk of Acquisition”.

Buffett’s Course Reversal on Airlines Sparks Talk of Acquisition

By Katherine Chiglinsky
March 22, 2019, 5:00 AM EDT

Warren Buffett, who once joked that capitalists should have shot down the Wright brothers’ first plane and saved investors money, has made a course correction that’s raised the idea he’s considering the purchase of an airline.

Thirty years after a troublesome investment in USAir, Berkshire Hathaway Inc. has amassed stakes that make his holding company among the biggest shareholders in the four largest U.S. airlines. Last year, the famed investor said he wouldn’t rule out owning a carrier, prompting talk about which one he’d grab.

“One of those airlines would certainly be affordable and doable” if Berkshire wanted to buy, said David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business. “But then the question is, would Buffett really want to do that?”

Berkshire has been acquiring shares of Delta Air Lines Inc., the world’s most valuable carrier, and now has airline stakes worth more than $9 billion. The market values of those companies range from around $14 billion to $34 billion, and recent share declines could present some bargains to Buffett.

Buffett, 88, hankers for a large deal. He said in his annual letter released last month that his push for an “elephant-sized acquisition” has been thwarted by high prices. And Berkshire is sitting on a cash pile that had grown to about $112 billion at year-end. Industry watchers have said Buffett may be closer to an outright purchase.