Market Memo: Airlines

No Planes, No Problems

Thesis: The Great American Airline Reset

The Historical Challenge

For decades, investing in US airlines has been a reliable way to destroy capital. It’s something we’ve grown accustomed to - airlines are where money goes to die. Even for legends - Warren Buffett, in his 2007 investor letter, said of airlines

“If a far-sighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down”

But if the past year has taught us anything, it’s that industry dynamics can change quickly. After all, industrials used to not trade at 30x earnings… There’s always more money to be made in “this time is different” than there is in “nothing ever happens”, could airlines finally be undergoing a transformation?