Berkshire Hathaway sold its airline business
American holding Berkshire Hathaway broke up with shares of airlines. It sold the papers of all four US manufacturers, losing about $55 billion in transactions.
Warren Buffett’s business hasn’t been going very well since the beginning of the year. Then the value of its shares fell by 19%, which is more than the S&P 500 index, which shows a 12% decline. One of the reasons for the decline in the holding’s revenues was the problems with a number of businesses that are part of the portfolio: the railway operator, car manufacturer Boeing, supplier of equipment for industrial and energy companies. Shoe and clothing factories have also lost their prices. The total decrease in Berkshire Hathaway’s profit was 34%.
In order to maintain its position, the holding began to get rid of its assets, and American airlines were the first to take action. According to Warren Buffett, investments in these enterprises have become unprofitable for the company, but the holding has mobilized all forces to block losses and maintain stability during the crisis.
Selling airlines is not the first deal for Berkshire Hathaway. At the beginning of this year, the holding company got rid of part of the media business – BH Media Group and The Buffalo News. The buyer was Lee Enterprises, which has been in business with BH Media since 2018. According to the terms of the deal, Berkshire Hathaway provides a loan for Lee Enterprises, the amount of which is 576 million dollars at 9% per annum. The buyer’s representatives noted that this agreement is beneficial for them, as it allows them to refinance their debt, which amounts to $400 million. In turn, this is an opportunity for Berkshire Hathaway to become the sole creditor.
Thanks to the purchase, Lee Enterprises has expanded its portfolio, which now includes 81 newspapers. In addition, information about the deal led to an 81% increase in the price of the company’s shares. Berkshire Hathaway’s securities have gained 0.97% in value. BH’s media business structure includes print and online publications.
Berkshire Hathaway company was founded back in 1839. At that time it was called Valley Falls Company. Gradually, through mergers and acquisitions of small firms, the company grew up. In 1929 it merged with a cotton enterprise from Berkshire and became Berkshire Fine Spinning Associates, and in 1955 it acquired the industrial company Hathaway and got the name under which it is known today – Berkshire Hathaway.
In 1960, the company was acquired by businessman Warren Buffett, and two years later he took control of the company. The textile industry was in crisis at the time, and the new owner expanded his business to include insurance services and then other areas.