Photograph of Joe Raedle / Getty Images
stock (ticker: LUV) won Thursday, as the unconfirmed speculation of social media that
Berkshire Hathaway by Warren Buffett
could buy back the company gave the stock elevation.
The history of return. This is not the first time Southwest has been cited as an acquisition target with Buffett as a contender. He has expressed his support for airline actions in recent years and Berkshire Hathaway (BRK B) is already the second largest shareholder in the South West. That said, the company has interests in the three major historical airlines …
American Airlines Group
(DAL) and United Continental (UAL) – as well.
Which is New. The question was a Twitter post StockTraders.Net, an online trading portal, said there was an unconfirmed "speech" that Berkshire "seeks to acquire" the rest of Southwest Airlines for $ 75 the action. The title gained momentum soon after, around 11 o'clock. The tweet has been reported for the first time by Bloomberg.
In a statement, Southwest said, "There have been rumors that Warren Buffett may be looking to acquire an airline for some time and that Southwest may well be suitable. In general, we do not comment on speculation, but appreciate Berkshire's continued support for Southwest Airlines. "
Berkshire did not immediately respond to a request for comment.
Look to the front. Will an agreement be concluded? At this point, there is no indication that it will go further than a water bottle at the airport security. (In addition, a bargain hunter like Buffett could have approached any of the Big 3 at a lower price because American, Delta and United all stayed in the southwest of the year.)
The $ 75 offer represents a premium of approximately 20% over the last share price. It's not too fragile, but management probably would not be a good deal, as equities have already risen more than 20% since the beginning of the year. In addition, many analysts believe that 2019 will be less turbulent for airlines than last year.
The hopes that Buffett can buy an airline have been dusted off in recent years, so investors probably want more than a dark tweet to hold their hats. (There is also some good news for Southwest that seems to have gone astray between the whispers of Thursday: after Wednesday's bell, we learned that the government had finally allowed the southwest to start its long-awaited roads in Hawaii.
The real thing to remember here may not be a concrete offer, but what the rumor reveals: the airlines, as an investment, have finally arrived.
The industry has gone from what Buffett once described as a "death trap" to the one he has invested in, so much so that many people think he wants to own one. In the end, 2018 was another year of struggle for many airline companies, limiting the group's back-and-forth cycle, a trend that will point fingers when they claim that a leopard can not not change it. Yet, the fact that markets think that a Buffett offer is a possibility shows that the fundamental framework has changed. Maybe things are really different this time around.
Southwest was up 3.7% to $ 55.83 in recent trade.
Write to Teresa Rivas at [email protected]