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Market Update

Will Airline Stocks Fly in 2017?

Berkshire Hathaway's big investment in the large domestic carriers has revived interest in these volatile stocks.

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In mid-November, the world learned that Warren Buffett had bet on airlines. His company,  Berkshire Hathaway (BRK.B), invested $1 billion in  American Airlines (AAL),  Delta Air Lines (DAL), and United Continental Holdings (UAL), during the third quarter.

It was a curious move for the value investor, in part because he's been negative on these companies in the past, saying at a 2013 shareholder meeting: "The airline industry has a situation where it has a very low incremental cost per seat with enormous fixed costs. … I'm skeptical."

Bryan Borzykowski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.