Warren Buffett And The Biggest Losers From The Airline Coronavirus Selloff

The founders and CEOs of airlines and their major investors have taken it on the chin financially as the coronavirus pandemic has spread worldwide. Airline stocks have been one of the worst performing sectors in world markets over the past month, with the NYSE ARCA Global Airline Index plunging 43.6% as of Thursday’s close.

One of the most prominent losers so far is Warren Buffett, who once quipped that investors would have been saved major heartache if a capitalist had been present to shoot down Orville Wright at Kitty Hawk in 1903. The positions held by his investment fund Berkshire Hathaway in Delta, United, Southwest and American Airlines have plummeted $3.78 billion in value over the past month to $5.74 billion. But Buffett is only the fourth biggest institutional loser on airline stocks.

Primecap, a Pasadena, Calif.-based investment management company, had the world’s largest holdings in airline stocks as of its year-end disclosure filings, with a value of $6.37 billion as of Thursday’s close, including all of the nine major public U.S. airlines. Its holdings as of the year-end were worth just a shade more than Blackrock’s, but Primecap’s managers clearly had more conviction in airlines, with the sector accounting for an outsize 6.4% of its assets under management compared to just 0.24% for the giant Blackrock.

The most all-in bettor on airlines by far, and proportionally the biggest institutional loser from the selloff: Boston hedge fund PAR Capital Management. Led by former airline analyst Paul A. Reeder III, if its positions haven’t changed since year-end disclosures, 40.5% of its $3 billion in assets would be in U.S. airlines. Its exposure to the battered travel sector runs deeper, with reported positions in the online travel sites Expedia, TripAdvisor and Trivago, and Hertz and Avis rental cars. 

The biggest individual loser: EasyJet founder Stelios Haji-Ioannou, whose fortune has plummeted to $1.1 billion over the past month along with the 47% slide in the share price of his London-listed airline. His sister, Clelia, and brother, Polys, also hold large positions in the airline.

The wealthiest chieftain of a public U.S. airline, Allegiant founder Maurice Gallagher, has seen his stake in the ultra-low-cost carrier slide to $286 million after a 38.6% decline in its shares.

Rakesh Gangwal, the billionaire founder of Indian discount airline IndiGo, has had his fortune cut to $2.3 billion as shares of his holding company InterGlobe Aviation have fallen 28.3% over the past month.

A 34.3% slide in Ryanair shares on the London Stock Exchange cut the value of CEO Michael O’Leary’s stake to $531 million as of Thursday’s close.

With American Airline shares dropping 55.3%, the biggest decline among U.S. airlines, CEO William Parker’s holdings have fallen in value to $33.9 million.  

Southwest CEO Gary Kelly’s 792,000 shares have fallen 38.7% in value to $28.6 million.

With many analysts expecting a v-shaped recovery in passenger numbers when the coronavirus pandemic ends, as occurred after the 2003 SARS epidemic, investors might be tempted to bottom fish. That’s what Buffett’s Berkshire Hathaway did in late February, picking up another 976,000 shares in the most profitable airline in the business, Delta. Those shares have since slid 27%.