When Warren Buffett speaks, investors all over the world take notice. So when the Oracle of Omaha said in 2002 that airlines were a “death-trap for investors,” people took notice.
“If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money,” said Buffett at the time.
“But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You've got huge fixed costs, you've got strong labour unions and you've got commodity pricing. That is not a great recipe for success.