Warren Buffett’s Opinion on Airlines and Automakers Still Tracks 25 Years Later
Warren Buffett, the co-founder and CEO of Berkshire Hathaway, did his homework on airplane and car manufacturers decades ago. Yes, his company was heavily invested in BYD, the Chinese EV maker globally disrupting the space. However, it’s been offloading its shares for some time now. Back in 1999, the entrepreneur offered his thoughts on cars and planes as investment strategies. As of 2024, the opinions aren’t all that stale yet.
Today, I found an old investment blog post from 2014. The blog reflects on Buffett’s 1999 interview for Fortune magazine. According to interview snippets, Buffett thoroughly studied the automotive and airline industries and came away unimpressed.
Interestingly, in his mind, cars and planes represented an incredible leap in mobility and quality of life for people. Mass adoption was clearly inevitable. As such, automakers and airline manufacturers should pose an excellent investment opportunity, right?
Buffett pooh-poohed both transit industries 25 years ago
Buffett found the opposite to be true. For example, he traced car OEMs back to the turn of the century. He counted upwards of 2,000 makes over the years. However, by 1999, the number of U.S.-based automakers had dwindled to three.
“After corporate carnage that never let up, we came down to three U.S. car companies – themselves no lollapaloozas for investors,” he said. “So here is an industry that had an enormous impact on America – and also an enormous impact, though not the anticipated one, on investors.”
The same concept applied to airlines. “As of 1992, in fact – though the picture would have improved since then – the money that had been made since the dawn of aviation by all of this country’s airline companies was zero. Absolutely zero.”
No doubt, Berkshire Hathaway’s relationship with NetJets has been a roller coaster. Buffett is known for his letters to investors, and his reflections on NetJets have swung wildly from encouraging to deeply apologetic.
With Tesla’s widely publicized operational and P&L troubles, Boeing’s catastrophic reputation whiffs, Southwest’s $200M+ Q1 loss, and other American automakers trying to figure out how to profitably electrify, we don’t see how Buffett’s 25-year-old opinions could be much different today.
