President Trump, buoyed by an unexpected jump in the stock market on Friday, expressed optimism that the airline industry will bounce back – by chiding investor Warren Buffett for dropping his airline stocks.
“He’s been right his whole life, but sometimes even someone like Warren Buffett — I have a lot of respect for him — they make mistakes,” Trump said after a strong jobs report sent airline stocks skyward, according to Business Insider.
After avoiding airline stocks like the plague for decades, Buffett’s Berkshire Hathaway firm finally pulled the trigger in late 2016, buying 30 million shares spread over four U.S. airlines. But the spread of the coronavirus pandemic severely damaged the travel industry, and Buffett dumped his airline stocks earlier this year in April.
One can certainly see Buffett’s reticence. The pandemic has hit every aspect of travel, especially the aviation industry. To continue slowing the tide of the coronavirus, several airlines, including Delta Air Lines, have blocked the selling of middle seats – an obvious loss of revenue.
At one point in April, airlines were operating at barely 5 percent of capacity compared to the same time frame last year. While they have been helped by grants and loans from the CARES Act stimulus package, it hasn’t nearly covered all the loss and carriers have had to request the Department of Transportation grant requests for service reduction to some smaller airports.
But Trump was encouraged by the events of Wall Street on Friday.
“They should have kept the airline stocks,” he said of Berkshire Hathaway, “because the airline stocks went through the roof today.”
Buffett announced at Berkshire’s annual shareholder meeting last month that he was dumping his airline shares, saying he wasn’t certain that passenger numbers would rebound from the pandemic in the next few years and that the carriers still would be beholden to the government for the grants and loans they received.
“The world has changed for the airlines,” Buffett said at the meeting. “The future is much less clear to me.”
Still, things are – slowly – starting to tick up. American Airlines, for instance, said it is increasing domestic service for the summer.
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