The following article, originally published at 5:56 p.m. on Monday, Nov. 14, 2016, has been updated with comments from analysts.
It's true that Warren Buffett got burned by an airline investment in decades ago, and that he's long been skeptical about putting money into the industry again.
But even the Oracle of Omaha can change his mind, especially when he sees a solid profit potential: The billionaire CEO's company, Berkshire Hathaway (BRK.A) , disclosed a stake in Monday regulatory filings in each of the three biggest U.S. carriers: American Airlines (AAL) , United Continental (UAL) and Delta (DAL) .
The moves reflect Buffett's "mindset as a value investor," Cathy Seifert, an analyst with CFRA Research, said in a phone interview. "It was a sector rotation into an area that has under-performed. He's going to go where he sees value."
Airline stocks may have become more attractive to Buffett after a spate of high-profile mergers in the past decade, including United's combination with Continental and Delta's purchase of Northwest Airlines, trimmed competition, and lower jet-fuel prices cut operating costs, TheStreet's Jim Cramer wrote in a column for the company's premium investing site Real Money. Additionally, a shortage of single-aisle commercial jets, the most widely flown planes, makes it tough for airlines to add seating capacity that could drag down ticket prices.
"In short, the group represents value, the price wars are subsiding and the companies all make oodles of cash, the exact opposite situation from when Buffett invested last," Cramer wrote.
Berkshire's stock fell 0.91% to $234,500 in regular trading in New York on Tuesday, while the airline stocks soared. American Airlines increased 2.1% to $44.32, United Continental jumped 2.3% to $64.37, and Delta rose 0.3% to $47.63.
Buffett's past pessimism toward the airline industry dates to his investment in USAir in 1989, on which he took a loss of $358 million. His "analysis of USAir's business was both superficial and wrong," Buffett said in a 1996 letter to investors, noting that he overlooked how deregulation would affect the company's profits.
"Investors have poured their money into airlines and airline manufacturers for 100 years with terrible results," Buffett said during an annual shareholder meeting. "It's been a death trap for investors."