Warren Buffett was a longtime skeptic of the airline industry. Then he changed his mind. Now he’s changed his mind again. jbarro writes
Photo: Daniel Zuchnik/Getty Images/WireImage In 2007, Warren Buffett wrote in a letter to Berkshire Hathaway investors that “if a far-sighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” But Buffett eventually changed his mind about the airlines, and now he has changed his mind again.
But over this past decade, it had seemed the U.S. airline industry had reached a point where this time really was different. Buffett had complained in 2007 that airline investors were “attracted by growth when they should have been repelled by it.” But an increasingly consolidated U.S. airline industry got over its growth addiction, touting “discipline” in not increasing capacity, flying planes that were increasingly full, and finally succeeding in charging passengers more to travel.
“The world has changed for the airlines,” Buffett said this weekend, then adding an observation about declining demand for business travel: “I don’t know whether the trends toward what people have been doing by phone — I mean, it’s been seven weeks since I’ve had a haircut, it’s been more than seven weeks since I put on a tie or anything. It’s just a question of what sweatsuit I wear.
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