Warren Buffett Just Made A Billion Dollar Investment In… Why It Matters

Again, how many different ways can the man with the golden touch impress us with his investing strategies. For the second time this year Berkshire Hathaway just invested about the amount of 160 truck loads and sunk it into the airline industry. $In total it is about 10 Billion Dollars.  Which we can only guess fills about 160 trucks.

For someone to invest into the industry was on record in 2013 referring to the industry as a ‘deathtrap’ for investors.

Here is the thing though…. It’s Warren Buffett, one of the most consistent investors int eh world and in fact in modern history.  So all the more reason not to question the change.

Just because he is about the only person who can, instead of picking one winner among all the airlines to win his investment, he spread it between the four big boys in the market. Which is a pretty big power play.

Spanning the last 10 years, the airline industry specifically in the US has changed. The big players in the field have all yielded record profits. There are also now fewer competitors in the market now. All the more sense that Buffett took advantage of this.

A little less than 20 years ago the sky was filled with names that went the way of the dinosaur and have now for the most part have been swallowed up by the big four.

As a result, apart from airlines such as Virgin American, JetBlue, Alaska, Hawaiian and ultra-low cost carriers Spirit, Frontier on the fringe, the Big Four only have to contend with themselves.

As a result, customers should not expect to see any differences in prices and or service while flying among the big four airlines. same great service same high price ;). All joking aside for Berkshire and Buffett this great investment pretty much fell in his lap.

Though the biggest “mega-carriers” are the most profitable airlines in the world right now. Apart from Southwest which has continued to grow. The day of the airlines in financial ruin are at least for now over.

American and US Airway’s recently completed merger that was THE largest in the world. Even though the new company will have to content with the operational differences. It should prove to pack punch to the airline industry.

All in all, the four largest airlines in the US, which also happen to be four largest in the world, are in a good place. Which is why all four warrant the investment from the Oracle of Omaha.