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Wildcat · 07-09-17, 10:40 AM

I thought I'd also mention, I don't think Buffett made a good move on the airline stock purchases. I'm not Warren Buffett but I do have some inside experience in the airlines. There are just way too many potential problems that could kill the share prices.

I'm sure in the very long term they will mostly be profitable, but so long as there is more than one carrier in the US, any one of them is susceptible to bankruptcy in the case of another terror attack that curbs air travel, and they're all very susceptible to a rise in oil prices. Airlines with a heavy Airbus fleet are also at risk for USD/EUR fluctuations both for new jets and parts/service contracts from Airbus. The government won't let the last 1 or 2 major airlines go bankrupt - too big to fail as they call those companies - but the first 3 or 4 that bite the dust will be left hanging in the wind by the government.

If I were Buffett I would have invested in all the industries that support the airlines and jet makers but probably would have avoided the airlines themselves to curb the risk. Lot of partners of GE that have a guaranteed future because of their involvement in producing engine parts for example, and many of the companies are spread around different world markets which is another safety buffer.

I guess he likes thinking about infrastructure and ultra-long term these days, what with his railroad purchase and all.

07-09-17, 10:40 AM	#7
Wildcat Engineer Join Date: Jan 2002 Posts: 215 Downloads: 69 Uploads: 0	I thought I'd also mention, I don't think Buffett made a good move on the airline stock purchases. I'm not Warren Buffett but I do have some inside experience in the airlines. There are just way too many potential problems that could kill the share prices. I'm sure in the very long term they will mostly be profitable, but so long as there is more than one carrier in the US, any one of them is susceptible to bankruptcy in the case of another terror attack that curbs air travel, and they're all very susceptible to a rise in oil prices. Airlines with a heavy Airbus fleet are also at risk for USD/EUR fluctuations both for new jets and parts/service contracts from Airbus. The government won't let the last 1 or 2 major airlines go bankrupt - too big to fail as they call those companies - but the first 3 or 4 that bite the dust will be left hanging in the wind by the government. If I were Buffett I would have invested in all the industries that support the airlines and jet makers but probably would have avoided the airlines themselves to curb the risk. Lot of partners of GE that have a guaranteed future because of their involvement in producing engine parts for example, and many of the companies are spread around different world markets which is another safety buffer. I guess he likes thinking about infrastructure and ultra-long term these days, what with his railroad purchase and all.