Would Warren Buffett Buy Airline Stocks?

One of the most uncharacteristic stock purchases in Warren Buffett's storied history was his acquisition of JetBlue Airlines shares in the late 1980s. Buffett sold his shares in JetBlue Airlines several years later, vowing to never again invest in airline stocks. The airline industry is the only sector of the economy that, as a whole, has lost money over every rolling ten year period since 1965.

These are not places to make easy money. Airlines have to contend with fixed labor costs, fixed prices of seemingly ever increasing fuel charges, and very intense competition. The margins are slim, often wiped out by fuel charges or plans not carrying fuel capacity, and I don't think you'll be hearing stories of an airline sustaining and raising a dividend for a half century, like we have seen from some of the best companies on the Dividend Aristocrat Index. The only blessing in the industry is the relatively high barrier to entry, but given its awful track record, and given the fact that oil costs can offset any profits, I don't see any long-term wealth creation in the airline industry. When you could purchase a company like Johnson & Johnson, which has billions of dollars in profits from over 1,000 different sources, and has been steadily increasing its dividend for 50+ years, how could you justify buying an airline stock? I just don't see it. Mark at Buy Like Buffett points to some of the difficulties in the airline industry, and I recommend that you check out his great thoughts on the subject by clicking here: http://buylikebuffett.com/buy-stocks-2/why-you-should-stay-away-from-airline-stocks/ .