Warren Buffett could save airlines, hotels and casinos as coronavirus devastates their earnings

Apr 2, 2020 2:30 AM ET

Warren Buffett is monitoring some of the companies affected by the novel corona virus, the Wall Street Journal reported on Tuesday.
The billionaire investor “circles the hardest hit companies in travel, accommodation and entertainment,” sources told the newspaper.
Airlines, hotels, casinos, cinemas and other companies suffer from people staying at home and the authorities closing unnecessary shops to slow down the spread of the pandemic.
Buffett could use the $ 128 billion pile of his Berkshire Hathaway conglomerate by investing in them or lending them money.
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Warren Buffett is watching some of the companies that suffer the most from the novel corona virus, the Wall Street Journal reported on Tuesday.

The billionaire investor and chief of Berkshire Hathaway “circles the hardest hit companies in travel, accommodation and entertainment, and strives to offer financial lifelines when needed,” the newspaper said, citing people familiar with the matter.

Airlines, hotels, casinos, cinemas and other travel and leisure businesses have little money as people stay at home to slow the pandemic spread and authorities close tourist hotspots like the Las Vegas Strip. Buffett is happy to help – at a price.

With Berkshire’s $ 128 billion cash stack, Buffett has been looking for an “elephant-sized acquisition” for several years. After the worst quarter for US stocks since the 2008 financial crisis, he could finally find one with a rating he can take.

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Buffett could also use cash as a loan. For example, he signed a $ 576 million finance agreement with Lee Enterprises in connection with the sale of Berkshire’s newspapers to the publisher in January.

Berkshire Hathaway’s Chairman and CEO has a selection of distressed companies. He could help the airlines and cheaply increase his stake in American, United, Delta or Southwest. Carnival, Norwegians, and Royal Caribbean could also welcome Buffett’s cash, as cruise companies’ offshore registrations could mean they are not eligible for a U.S. government bailout.

Hotel chains like Marriott and Hilton, casino groups like Caesars Entertainment, cinema chains like Cinemark and AMC Theaters as well as theme park operators like Six Flags and SeaWorld could also fit into the bill.

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