Berkshire’s airline stake gives flight to shares

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US airline stocks flew higher after Warren Buffett’s Berkshire Hathaway sharply increased its stake in the sector.

Berkshire disclosed on Tuesday a $9.3bn holding in the industry. And while the Oracle of Omaha has previously called airlines “a death trap for investors”, Berkshire has spent more than $2.1bn each on the shares of four carriers.

In pre-market trading, American Airlines added 2.8 per cent, Delta Air Lines gained 2.5 per cent, United Continental Holdings rose 2.1 per cent and Southwest Airlines was up 2.5 per cent.

Though Berkshire did not disclose shares in Alaska Airlines, its shares were also 1.3 per cent higher.

It was first reported Mr Buffett, who had disparaged the stocks for years, had begun buying airline shares in November after several carriers had indicated signs of improvement. Prolonged weakness in fares, which had hit profits, had been easing, and a key industry metric, revenue per available seat mile, was recovering.

Shares in the NYSE ARCA Airline Index are up more more than 40 per cent over the last 12 months.

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