U.S. Airline Stocks Plunge on Warren Buffet's Sell-Off

Shares of Delta, American Airlines, Southwest Airlines and United Airlines tumbled today.

Author: Anthony Russo   

U.S. stocks in the airline sector plummeted by midday Monday after Warren Buffet noted his company sold full stakes in the country's four largest carriers.

The American billionaire investor said Saturday during a shareholder meeting that Berkshire Hathaway (NYSE: BRK-A) sold $7 billion of stock in American Airlines Group Inc., (Nasdaq: AAL) Delta Air Lines, Inc. (NYSE: DAL) Southwest Airlines Co. (NYSE: LUV) and United Airlines Holdings, Inc. (Nasdaq: UAL) 

The news sent the stocks in freefall, as AAL plunged 10% lower to $9.56 per share, DAL tanked nearly 10% to $24.01 per share, DAL tumbled approximately 10%  to $21.82 per share and LUV slipped 8% at $26.91 per share by midday Monday. According to annual company filings, Berkshire owned a stake of 11% in DAL, 10% in AAL, 10% of LUV, and 9% in UAL. 

"We made that decision in terms of the airline business," Buffet said. "We took money out of the business basically even at a substantial loss."

Berkshire also reported a net loss of nearly $50 billion for the first quarter on Saturday, sending its stock down 3% to $265,619.47 per share by midday Monday. Buffet has also said that Berkshire does not "see anything that attractive" in terms of potential investments. 

In addition, investors were likely still spooked over President Trump's threat to impose tariffs on China, which sent the markets down on Friday. 

The Dow Jones sank nearly 1% to 23,508.94 points and the S&P 500 dropped more than 12 points to 2,818.59 by midday. The would mark a three-day losing streak for the benchmarks. 

Once it's safe to do so, the demand for traveling will go back up. Most of the four largest U.S. airliners should have enough resources to survive the pandemic, but the one question mark lies on AAL. Reportedly, AAL has more than $25 billion in short and long term debt and is a stock you should avoid for now. But keep an eye on LUV, UAL, and DAL as the U.S. loosens Covid-19 travel restrictions.