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U.S. airlines posted considerable losses in the first quarter, and are on track for a dismal second-quarter, as travel restrictions and government-mandated lockdowns across the world have brought demand to a virtual standstill.
“The world has changed” for the aviation industry,” Buffett said at Berkshire Hathaway’s annual meeting on Saturday.
American Airlines (O:AAL) has posted a $2.2 billion net loss, its first quarterly loss since emerging from bankruptcy in 2013, while United Airlines (O:UAL) reported a loss of $1.7 billion for its first quarter.
Shares in Delta Air Lines (N:DAL), American Airlines, Southwest Airlines Co (N:LUV) and United Airlines were all down between 8% and 11% before the bell.
The S&P 1500 Airlines index <.SPCOMAIR> has lost 57.4% this year, compared to a 12.4% decline in the broader S&P 500 (SPX).
Airline executives have warned of a slow recovery even after the virus is contained and have said demand may not recover to 2019 levels for years.
Airlines in the United States have seen a near 95% drop in domestic passengers and are now working to reassure customers about the safety of air travel by instituting new cleaning and social distancing procedures.
Berkshire Hathaway had held an 11% stake in Delta, 10% in American, 10% in Southwest and 9% in United at the end of 2019, according to its annual report and company filings.
