ozcutty2

Why Airline Stocks Are So Often Bad Investments

Saj, its simple, planes are very expensive to buy and operate.
With such high capital costs you basically spend the whole time paying off planes before you have to replace them again. That is Warren Buffets point about airlines.
Thats why he prefers businesses that have low or no capital expenditure. Look at businesses like Moodys, insurance or asset managers, their main costs are salaries and accomodation. No huge capitals expenditures or fuel costs.