Warren Buffett’s Berkshire Hathaway sold nearly $390 million worth of Delta and Southwest shares this week

Warren Buffett.

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Warren Buffett.
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Kevin Lamarque/Reuters
  • Warren Buffett’s Berkshire Hathaway sold nearly $390 million worth of shares in Delta Air Lines and Southwest Airlines this week, new SEC filings show.
  • The billionaire investor’s company cut its stake in Delta by nearly one-fifth and its Southwest holdings by just over 4%.
  • Berkshire’s stock portfolio took an estimated $5 billion hit on its airline holdings in the first quarter as the novel coronavirus hammered demand and led to travel restrictions.
  • Visit Business Insider’s homepage for more stories.

Warren Buffett’s Berkshire Hathaway sold nearly $390 million worth of shares in Delta Air Lines and Southwest Airlines this week, reducing its exposure to an industry being hammered by the coronavirus pandemic.

The famed investor’s conglomerate slashed its roughly 11% stake in Delta by nearly one-fifth, from 71.9 million shares to 58.9 million, according to a Securities and Exchange Commission filing published on Friday.

Berkshire also sold about 2.3 million shares in Southwest, reducing its stake in the airline by just over 4%, another SEC filing showed.

It netted about $314 million from the Delta share sales, plus another $74 million from the Southwest disposals, for a total of about $389 million.

The news sent Delta’s stock down 11% and Southwest’s stock down 9% in after-hours trading.

Berkshire’s stock portfolio took an estimated $5 billion hit on its investments in the four major US airlines last quarter as they plunged by an average of 52% in the period.

But the disposals are surprising. “I won’t be selling airline stocks,” Buffett told Yahoo Finance three weeks ago. Berkshire also added to its Delta stake in late February, purchasing the shares at nearly twice the price it sold each for this week.

The sales come as the airline industry continues to endure heavy losses amid the coronavirus outbreak. Airlines have been forced to suspend routes, cancel flights, and ground planes as travel restrictions, border closures, and stay-at-home advisories lead to a near halt in air travel.

On Friday, Delta CEO Ed Bastian said in a memo to employees the airline was burning through more than $60 million every day as the crisis continues and that it had canceled about 115,000 flights for April, or 80% of its total schedule. Sunday saw just 38,000 passengers fly, compared with 600,000 on the last Sunday of March in 2019, he wrote.

Southwest has been similarly affected as travel demand has fallen. CEO Gary Kelly previously said that the airline was losing money on every flight it operates.

Both airlines have said they plan to file for payroll grants under the federal coronavirus aid package, which will help pay workers. Under the terms of the grants, airlines will be prohibited from buying back stocks or paying dividends to shareholders.

Airlines receiving aid through the payroll grants, or in the form of loans, are also required to continue flying despite the low demand, as part of an effort to maintain supply chains and connectivity for essential travel.