Beijing time 10 news, according tomedia reports, “share god” Buffett’s pessimistic forecast for aviation stocks now seems to be not wrong. Earlier this year, Mr. Buffett cleared aviation stocks and warned that the outbreak had brought about fundamental changes in the airline industry.
In its second-quarter results, released over the weekend, Buffett’s Berkshire Hathaway accounted for about $10 billion in asset impairment expenses related to precision parts, the aircraft parts maker. The company said the vaccine could be the only remedy for the “particularly severe” impact of the pandemic on the aerospace market.
“The new Crown virus pandemic caused a substantial decline in commercial air travel in the second quarter,” Berkshire said in a regulatory filing on Saturday discussing second-quarter results. “The airline’s response has been to reduce and/or cancel aircraft orders, which has led to a significant drop in the productivity of aircraft manufacturers, and PCC customers are implementing significant inventory reductions.”
At Berkshire’s annual general meeting in May, Buffett announced a complete reversal of his bet on airlines, clearing all of his holdings of the big four U.S. airlines.
Over the next month, the airline’s rebound drew criticism from people, including U.S. President Donald Trump, who said Buffett had made a mistake. But since then, the S.P. 500 has fallen 26 percent from its peak in early June, suggesting that Mr. Buffett may be right in the long run.
Despite Buffett’s liquidation of aviation stocks, mr. Buffett still has a lot of exposure to the airline industry through his stake in precision parts. Berkshire bought the company more than four years ago for $37.2 billion.
Now, as a result of the outbreak, precision parts have had to be restructured, including 10,000 job cuts in the first half of the year. The company posted a pretax loss of $78 million in the second quarter, compared with a profit of $481 million a year earlier.
Berkshire is cautious about when the crisis could end. “In our judgment, the timing and extent of the recovery in commercial airlines and the aerospace industry may depend on the development and mass distribution of drugs or vaccines that are effective for treating viruses,” the company said. “