From a $358 million USAir investment in 1989 to spending billions for big stakes in the country’s largest airlines in 2016, Warren Buffett has covered a lot of ground with an industry he once called a “death trap” for investors.

1994: Berkshire Hathaway’s loan to US Air, in the form of a purchase of preferred stock, was almost five years old when Warren Buffett told the 1994 shareholders meeting it was a deal he should not have made. He held out hope, however, that the airline’s CEO might be able to cut costs in what he acknowledged would be an “enormously tough negotiating job.”

1996: Two years later, USAir had a new CEO and a brighter outlook. It also still had its “outofline costs.” Buffett told the 1996 shareholders meeting the investment looked “considerably better,” but, even so, it was a mistake that Charlie Munger wouldn’t let him forget anytime soon.

1997: The investment was looking even better. Buffett gave credit to Stephen Wolf, the airline’s CEO, for improving its financial performance and catching up with scheduled dividend payments to Berkshire. Buffett hoped Wolf might even be able to “nullify” his mistake.

1998: With help from a booming stock price, US Airways paid back its $358 million loan with common shares that were sold for $574 million. Buffett’s “mistake” had also brought in around $240 million in dividends. Three months later, Buffett told shareholders Berkshire wouldn’t rule out making another airline loan, but wasn’t interested in buying an airline’s common stock.

2013: Fifteen years later, following two bankruptcies and a reverse merger with America West, US Airways was preparing to combine with American Airlines, one of a series of mergers that sharply reduced the number of competing carriers. At the 2013 shareholders meeting, Buffett was skeptical when asked about the industry’s improved profitability.

2017: Just three years later, Berkshire surprised the investment world by taking multibillion dollar stakes in American, Delta, United, and Southwest. But at the 2017 shareholders meeting, Buffett didn’t sound very enthusiastic about it.


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