Berkshire Hathaway is currently livestreaming its annual meeting and we've already learned quite an interesting move by Warren Buffett, one of the world's best investors.
Mr Buffett told the world that Berkshire Hathaway has completely exited its stakes of the four major US airlines that it invested in.
That means an exit from Delta, United, Southwest and American Airlines. They formed the bulk of the share sales that Berkshire Hathaway recently did amounting to US$6.5 billion.
Why did Warren Buffett sell airlines?
He said that due to the coronavirus, the fundamentals of the airlines have changed. Mr Buffett said that "the world has changed for airlines and I wish them well".
Warren Buffett said he made a mistake which lost money.
It's a shame for him and Berkshire Hathaway. He'd avoided airlines for decades. Then when he finally decided to invest it was only a few years later everything changed due to this horrible situation.
"The airline business, and I may be wrong and I hope I'm wrong, but I think it's changed in a very major way."
Pretty ominous for airlines.
What does this mean for airline investors?
Well, Warren Buffett is just one person with one opinion. He is occasionally wrong, but he's very often right. I think he's right. Over the next several years there's probably going to be less air travel with higher costs.
Virgin Australia Holdings Ltd (ASX: VAH) has already fallen victim to the current situation. Qantas Airways Limited (ASX: QAN) is better positioned to survive but it could also be hampered over the long-term from conditions being fundamentally changed.
I still believe the current Qantas share price may be overly negative on an 18-month view, so there could be a possible strong shorter-term recovery from Qantas. But I don't think it's going to be as good of an option over the long-term as it was before this crisis. Seeing Warren Buffett exit could mean a harsh sell-off next week.
