Wednesday, April 4, 2018

Southwest CEO says he hasn't talked to Warren Buffett about a sale to Berkshire Hathaway

If Warren Buffett is interested in buying Southwest Airlines, he's not telling the airline's CEO directly.

Southwest Chairman and CEO Gary Kelly said Tuesday that he hasn't talked to Buffett since the Berkshire Hathaway CEO sparked speculation with a comment that he wouldn't rule out owning an entire airline.

Berkshire Hathaway already owns 8.1% of Southwest, making it the Dallas airline's second-biggest shareholder behind Primecap Management Co. Berkshire Hathaway also holds major stakes in American, Delta and United airlines.

Some analysts and columnists argue that Southwest could be the financier's most logical target because of its low-cost business model, investment-grade credit rating, and potential for growth. It wouldn't be cheap, however — Southwest's market value is around $33 billion.

Berkshire Hathaway Inc., which is based in Omaha, Nebraska, didn't immediately comment.

Buffett's company is sitting on about $116 billion in cash, and he has said the company could make one or two "huge" acquisitions.

Kelly said Southwest talks regularly to all its shareholders including Berkshire Hathaway, "but obviously I can't speak for them or what their interest might be."

Kelly made the comments to reporters after a ceremony marking the opening of a $250 million building to house 2,000 employees and Southwest's pilot-training center.

Southwest hopes to get federal certification that it needs to fly to Hawaii in time to start flights by year end, although they could be pushed back into 2019. Kelly said Southwest is "strongly considering" augmenting flights from California with service between the Hawaiian islands — a bold challenge to Hawaiian Airlines, which dominates intra-island service.

Kelly also said he is not opposed to bullet trains running between Dallas and Houston — a cornerstone route for Southwest — unless the trains receive taxpayer subsidies, which he said would be unfair competition.

(David Koenig - The Associated Press) 

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