A gloomy outlook for travel

By | Category: Travel news

The confidence of travel companies took a bit of a knock over the weekend when one of the largest world investors – Warren Buffett – announced that he had sold all the shares he held in airlines.

Delta Airlines – one of the stocks hit on Monday when Buffett sold all his airline shares?

It isn’t as if he had small stakes. His company, Berkshire Hathaway, revealed stakes of 11% in Delta Air Lines, 10% in American Airlines, 10% in Southwest Airlines, and 9% in United Airlines.

Needless to say when the stock markets opened on Monday morning airline stocks took a hit.

American Airlines lost over 13% on the first trading day after Buffet’s announcement as did Delta and United Airlines. South West only about 9% and United Airlines lost.

Airlines in Europe also fared badly despite Buffett having (I think) no shares in them. The owners of BA, Aer Lingus, Iberia and Vueling lost value in morning trading as did easyJet, Ryanair, Air France-KLM and Lufthansa.

It all shows that when Buffett says or does something other investors pay attention.

But what does it matter to us ordinary mortals who travel and fly on holiday?

It shows that if an investor as savvy as Buffett is avoiding airlines he sees little profit in them for a while. He obviously doesn’t see air travel picking up as forecast by Ryanair’s boss, Michael O’ Leary last week.

And if Buffett thinks airlines aren’t a good bet what does he think of the rest of the market for travel? He has no investments (I think) in travel companies, hotels or cruise ships.

Buffet is also sitting on over $140 billion in cash which he isn’t putting into travel or tourism stocks or anything else for that matter other than treasury bonds.

It all means that he doesn’t see much of an upturn in travel and holidays for the next year or so. And if he doesn’t a lot of other people will take a pessimistic view of  the holiday and travel business as well.

It looks like a week in the back garden for me this year rather than anywhere more exotic!

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