Billionaire investor Warren Buffett sold his stake in Delta Air Lines and other major U.S. carriers, portending rough skies ahead for the airline industry.
The move drove a drop in Atlanta-based Delta's already-deflated stock price after markets opened Monday. Delta shares were trading in the $21 to $22 range midmorning, down nearly 10% from Friday's close. Delta stock had been as high as $62 in mid-January but began a steep decline in late February as the coronavirus spread.
Buffett's Berkshire Hathaway had been investing in airlines since 2016, spending $7 billion to $8 billion to buy 10% of Delta, American, United and Southwest.
But in comments at his company's annual meeting Saturday, he said he thinks the airline business "changed in a very major way," in part because Delta and other airlines have borrowed billions of dollars to stay afloat and will have to pay that back over time.
Buffett emphasized that the decision to sell "was not in any way the fault of four excellent CEOs." He said the downturn in travel is affecting hotels, cruises and theme parks, "but the airline business in particular."
Delta said it is aware of Buffett's announcement about the sale of all airline holdings, including Delta's, and said in a written statement that "we have tremendous respect for Mr. Buffett and the Berkshire team."
"We remain confident that the strengths that are core to Delta's business — our people, our brand, our network and our operational reliability — will endure and position Delta to succeed as a better, stronger, and more resilient airline in the future," Delta said.
Buffett said he doesn't know "whether it's two or three years from now that as many people will fly as many passenger miles as they did last year. They may and they may not, but the future is much less clear to me."