Berkshire Meeting: Buffett on Airlines
May 06 2017 - 12:06PM
Dow Jones News
From the analyst panel, Gregg Warren of Morningstar asks about
Berkshire Hathaway's airline investments. Over the past year,
Berkshire has taken stakes in American Airlines, Delta Air Lines,
United Continental and Southwest Airlines.
Mr. Buffett says there's no comparison between Berkshire's
railroad business and its investment in airlines, shooting down a
comparison that some observers have made. At one point, Berkshire
bought shares of several railroad companies before buying BNSF
outright
Airlines are a "fiercely competitive industry" but even so, it's
not as competitive as it used to be, he says.
The industry "has been operating for some time now at 80% or
better capacity" measured by seat miles, and he predicts they'll
continue operating at above average capacity for the next few
years.
"They actually at present are earning quite high returns on
invested capital," higher even than FedEx or UPS, he says with a
couple caveats. But there could be a price war, which will sap
results, he warns.
"It is no cinch that the industry will have more pricing
sensibility" than they have in the past, but the conditions have
improved, including with its labor relations. All four are buying
back stock "at a good clip" and he expects this to continue.
Click here to see the full live coverage of Warren Buffett at
Berkshire Hathaway's annual meeting:
http://www.wsj.com/livecoverage/berkshire-hathaway-2017-annual-meeting-analysis
Write to Erik Holm at erik.holm@wsj.com
(END) Dow Jones Newswires
May 06, 2017 11:51 ET (15:51 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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