Collapse victims: Warren Buffett and other airline investors who lost money due to coronavirus
Airline stocks over the past month have been among the worst investments in global markets. Among the main victims of the fall in their value are investor Warren Buffet and several other billionaire
Founders, executives and major investors of airlines have come under attack due to the coronavirus pandemic. Over the past month, airline stocks have been among the worst investments in global markets. At the close on Thursday, the NYSE ARCA Global Airline Index, which reflects the performance of publicly traded international airlines, fell 43.6%.
- One of the most famous investors affected by the panic in the markets is Warren Buffet. He once joked that investors would have been much calmer if some capitalist had shot the pioneer aircraft engineer Orville Wright in Kitty Hawk in 1903. Over the past month, shares of Delta, United, Southwest and American Airlines, owned by its investment fund Berkshire Hathaway, have fallen in price by $ 3.78 billion to $ 5.74 billion. At the same time, Buffett is only the fourth-largest institutional investor in the sector. airlines.
- At the end of last year, the world's largest position in the sector was held by Primecap, a management company in Pasadena, California. She owned, among other things, the securities of all nine leading US airlines. At the close of trading on Thursday, the value of its assets was $ 6.37 billion. At the end of the year, Primecap’s aviation assets were slightly larger than Blackrock’s, but Primecap’s managers obviously believed more in the airline industry: 6.4% of assets under this sector company management, while the giant Blackrock - only 0.24%.
- The Boston hedge fund PAR Capital Management, managed by former market analyst Paul Reader, made the largest bets on airlines and, accordingly, suffered the most notable losses. American airlines account for 40.5% of the fund’s assets worth $ 3 billion. Its relationship with the tourism sector affected by the coronavirus is even stronger: the fund owns shares in Expedia, TripAdvisor and Trivago travel sites, as well as Hertz and Avis car rental services.
- Of the individual investors, the founder of EasyJet, Stelios Hadji-Ioannou, was the most affected by the coronavirus. Airline shares on the London Stock Exchange fell 47% over the month, and the businessman’s fortune fell to $ 1.1 billion
- Maurice Gallager, the richest leader of the American public airline - the founder of the Allegiant Air low-cost airline - could observe how his company's shares fell 38.6% and his share price fell to $ 286 million.
- The fortune of the founder of the Indian low-cost airline IndiGo Rakesh Gangwal fell to $ 2.3 billion after the shares of his holding InterGlobe Aviation for the month fell by 28.3%.
- Shares of Ryanair on the London Stock Exchange lost 34.3%, while the value of the share of CEO Michael O’Leary fell to $ 531 million.
- American Airline fell in price more than any other American airline: its shares crashed by 55.3%. The value of the share of the general director of the company William Parker decreased to $ 33.9 million.
The value of 792,000 shares owned by Southwest CEO Gary Kelly fell 38.7% to $ 28.6 million.
Many analysts rely on the V-shaped recovery of passenger traffic after the end of the coronavirus pandemic, as happened after the 2003 SARS epidemic. Given this, investors may be interested in the least successful players. That is exactly what Buffett's Berkshire Hathaway did in late February, which acquired an additional 976,000 shares of Delta's most profitable airline on the market. Since then, these shares have fallen in price by 27%.