Warren Buffet’s Berkshire Hathaway Divests Delta, Southwest Airlines Stock


Billionaire investor Warren Buffett’s Berkshire Hathaway sold about 18% of its stake in Delta Air Lines Inc. (DAL) for $314 million as the U.S. airline operator said it expects revenues to plunge 90% in the second quarter.

Berkshire sold about 13 million Delta shares on Wednesday and Thursday priced between $22.96 and $26.04, according to SEC filings. Separately, Buffet’s Berkshire also divested about 4% of its stake in Southwest Airlines Co. (LUV) dumping about 2.3 million shares for about $74 million, SEC filings show. Delta shares, which were trading around $59 at the start of the year, slid 0.1% to $22.48 on Friday.

The sales come as Delta CEO Ed Bastian warned that the embattled airline expects second-quarter revenue to drop 90%.

“Delta is burning more than $60 million in cash every day, we know we still haven’t seen the bottom,” Bastian wrote in a memo to employees. “Without the self-help actions we are taking to save costs and raise new financing, that money would be gone by June.”

At the end of last month, five-star analyst Michael Linenberg at Deutsche Bank raised Delta’s rating to Buy from Hold. Overall Wall Street analysts have a Moderate Buy consensus rating for Delta, which is split into 7 Buys and 5 Holds. The $51 analyst average price target implies a staggering 127% yield should the airline industry recover and the target be met in the coming 12 months. (Delta’s stock analysis on TipRanks)

Bastian added that the airline continues to shrink its network as demand falls and will operate just enough flying to maintain essential services. In April, the airline’s schedule will be at least 80% smaller than originally planned, with 115,000 flights cancelled.

Buffet’s Berkshire is also a big investor in two other U.S. carriers American Airlines Group Inc (AAL) and United Airlines Holdings Inc (UAL).

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