Less than a month after making a contrarian bet by buying Delta Air Lines (DAL) on its coronavirus-inspired downward drop, Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) has sold some of its stake, marking an about-face view of an industry that has been paralyzed by the coronavirus pandemic and corresponding drop in travel.
According to a Securities and Exchange Commission filing on Friday, the famed value investor’s conglomerate sold a chunk of its approximately 11% stake in Delta – shedding roughly one-fifth of its stake, or approximately $390 million.
The company also sold a smaller stake in Southwest Airlines (LUV) , reducing its stake in the airline by just over 4%, another SEC filing showed.
The sales mark a surprisingly rapid about-face for Buffett, who just a month ago grabbed headlines when his conglomerate boosted its stake in Delta as shares of airlines both in the U.S. and abroad were posting unprecedented price declines amid the coronavirus-induced stock market rout.
Indeed, in early March, Berkshire acquired more than 976,000 shares for about $45.3 million, or an average price of $46.40, according to a previous SEC filing. That followed Delta and other carriers shedding about 20% of their value at the time.
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Since then, however, airlines and virtually all other sectors of the economy have experienced unprecedented drop-offs in activity as the onslaught of the coronavirus brought first Europe and then North America to an economic standstill.
Delta on Friday said it expects revenue over the next three months to be down 90%, with no end of the industry's troubles in sight.
"Even as Delta is burning more than $60 million in cash every day, we know we still haven't seen the bottom," CEO Ed Bastian warned on Friday, noting that April's flight schedules will be "at least 80% smaller than originally planned, with 115,000 flights canceled."
As an example of the drop in traffic, he said that on March 28 Delta carried only 38,000 customers, vs. its normal late-March Saturday of traffic of 600,000.
"I wish I could predict this would end soon, but the reality is we simply don't know how long it will take before the virus is contained and customers are ready to fly again," Bastian said.
Delta will release its first-quarter results on Wednesday. Analysts polled by FactSet expect the airline to have posted a loss of 44 cents a share.
Shares of Delta were down 1.6% at $22.12 in trading on Monday, while shares of Southwest were down 0.13% at $30.50.