I must say, if I had billions of dollars I could invest in any company, an airline wouldn’t be one of them… well, at least at this very moment.
Berkshire Hathaway returns to airline investing
The stock market has been absolutely wild as of late, at least for certain sectors. When it comes to investment oddities, one of the big stories recently has been how Berkshire Hathaway has been sitting on a record $400 billion in cash, which otherwise counters the industry trend.
Berkshire Hathaway founder Warren Buffett (who is now 95 years old, and is still Chairman, but no longer CEO) is known for having some amazing insights into the market over the years, so many have thought “well clearly he knows something other people don’t.”
Yesterday was the deadline for institutional investment firms to submit their form 13Fs, disclosing their investments for the previous quarter (January through March of 2026). Berkshire Hathaway’s disclosure indicates that the firm purchased 39,809,456 Delta shares in the first quarter, at a cost of around $2.65 billion. So that implies that the company purchased shares at around $66.50 each, and Delta is now Berkshire Hathaway’s 14th biggest holding.
Delta’s stock is currently just over $70, and is up a bit after hours, due to the Berkshire Hathaway news.
Berkshire Hathaway has a fascinating history with investing in airlines. The company completely stopped investing in airlines just weeks after the start of the coronavirus pandemic, in early 2020. The company previously had huge a stake of around $4 billion in American, Delta, Southwest, and United, and it sold them off at a huge loss, clearly thinking the industry had fundamentally shifted, or that money could better be invested elsewhere.
Even prior to that, Buffett had been very critical of investing in airlines. For example, in a 2007 letter to shareholders, Buffett wrote that “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines.” That’s only one of the many comments he made about what bad investments airlines are.
I know Buffett has long been a fan of investing in American companies, but it seems he (or at least now Berkshire Hathaway) can’t stay away from airlines.
Congrats to Delta, but I find this to be kind of wild
You’ll constantly hear airline executives talk about how Wall Street just doesn’t understand the airline industry, and they suggest that airline stocks are wildly undervalued. It doesn’t matter which airline it is, or what part of the cycle we’re in, they’ll almost always say that.
It reminds me of when in 2018, former American CEO Doug Parker talked about the company’s stock is “so undervalued it defies logic,” while the stock was trading in the high $40s. At the same time he told others how undervalued the stock is, Parker also sold the highest number of his own shares to date. That was a smart move, because in the years since, the carrier’s stock has gone down by more than two-thirds.
The thing is, I get that airline executives do the best they do, and their job is to increase the company’s stock price. But it doesn’t change the reality that airlines are really tough businesses, even under the best of circumstances. It’s just an impossibly difficult industry.
Of course I’ll defer to Berkshire Hathaway’s expertise over mine when it comes to investing, but I certainly find it surprising to buy airline stocks when they’re near all time highs. And I’d support my argument by simply quoting everything Buffett has said over the years about investing in airlines. 😉
Now, there’s certainly money to be made with investing in airlines in the short term. JPMorgan airline analyst Jamie Baker will often reference the “down 30 in 30” rule, whereby when airline stocks fall 30% or more in 30 days, they then go up at least 50% within 180 days in a vast majority of situations. I don’t want to misquote him, but I believe their number is a 70%+ chance of a 50%+ return, based on historical trends. Someone correct me if I got that wrong.
Of course this is no guarantee of future performance, and this is not investment advice. My point is simply to say that I think the people who make the most money trading in the airline industry are those who buy the dips. My general observation is that nowadays for the “healthy” airlines, stocks recover pretty quickly, as they’re typically among the first to be impacted by market volatility.
Bottom line
Berkshire Hathaway has disclosed that it has purchased nearly 40 million Delta shares in the first quarter of 2026, at a cost of around $2.65 billion. This means Delta is now Berkshire Hathaway’s 14th biggest investment, and the company owns a little over 6% of Delta, with an average acquisition cost of around $66.50 per share.
While Buffett has taken stakes in airlines over the years, he has consistently talked about what a bad and risky investment they are. So it’s interesting to see the company once again get into airline investing. Congrats to Delta, because it’s also noteworthy how the company only chose a major position in one airline, and didn’t go with Southwest, United, etc.
I get Berkshire Hathaway’s concerns about some of the tech stock booms being a bubble, as that’s a very real possibility. But if we do see that sector crash, that also has major implications for premium airline demand, given where so much money in the K-shaped economy is coming from.
What do you make of Berkshire Hathaway’s Delta investment?
I'll butcher the quote, but Buffett once said, "If someone had been at Kitty Hawk and shot down Wilbur and Orville's airplane, he would have done a great service for capitalists everywhere."
Delta owns a refinery, one of only three in the mid Atlantic region. Could this be what makes it attractive?
Oh yes , "airline shares" are so "positive" . Ask the PanAm and TWA shareholders .
The major US airlines are among our best and most important companies (despite all the armchair critics) but they are prone to very visible out-of-nowhere "disasters" that are outside their control. Consider, for example the Covid hysteria and today's Iranian oil spike. This is why they are so volatile and, arguably, undervalued. That said, unless you're just going to buy tech stocks at any price point (and history suggests you could), it makes sense for...
The major US airlines are among our best and most important companies (despite all the armchair critics) but they are prone to very visible out-of-nowhere "disasters" that are outside their control. Consider, for example the Covid hysteria and today's Iranian oil spike. This is why they are so volatile and, arguably, undervalued. That said, unless you're just going to buy tech stocks at any price point (and history suggests you could), it makes sense for Berkshire to look at other opportunities.
"Arguably undervalued" ? Ask the Spirit employees .
Airline stocks are often a good hedge against fuel prices - if fuel goes down, airline stocks go up. Assuming with volatility due to Iran War, BH is doing that here.
"if fuel goes down" ? ha-ha .