Two of the world’s most famous billionaires have conflicting ideas about where investors should put their money.
Richard Branson is giving up control of Virgin Atlantic, by selling a 31% stake in the airline he founded in 1984. He will stay on as chairman, and retain a 20% stake in the group, but the sale of a stake to Air France-KLM leaves Delta, with a 49% stake, as the airline’s largest shareholder. Last year, Branson sold Virgin America to Alaska Airlines.
Meanwhile, legendary investor Warren Buffett thinks it’s a great time to invest in aviation. The notoriously loss-making industry “got a bad century out of the way,” he said earlier this year, after securities filings revealed that his Berkshire Hathaway $BRK.B company had amassed holdings in Delta, American Airlines, United, and Southwest. This has proved shrewd—so far—with airline stocks outperforming the broader market over the past year (despite a recent tumble).
Branson’s stake sale highlights another thing happening in the airline industry: consolidation. Over the past decade, the number of US carriers has shrunk from 18 to 10. Out of those airlines, only four account for 80% of domestic capacity.
