Imagine the Price Increases If Billionaire Warren Buffett Buys Southwest Airlines!

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Imagine the Price Increases If Billionaire Warren Buffett Buys Southwest Airlines!

KeithImagine the Price Increases If Billionaire Warren Buffett Buys Southwest Airlines!Million Mile Secrets Team

We devote thousands of hours of research to help you get Big Travel with Small Money. You support us by signing-up for credit cards through partner links which earn us a commission. Here’s our full Advertising Policy.

Southwest is without a doubt my favorite US airline.  They’re a Chase airline transfer partner with a no blackout date policy.  So it’s easy to use points to save on airfare to fantastic destinations.  And they offer the Companion Pass, which is the best deal in travel.  My wife and I used it last year to save nearly $3,000 on airfare!

All of these amazing perks could be in jeopardy if the speculation about Warren Buffett buying the airline comes true.  Today, investment bank Morgan Stanley shared a detailed analysis about why Southwest would be a great purchase for the legendary investor.  This idea should scare Southwest frequent flyers.

Southwest Is Popular With Many in the Miles & Points Hobby!  That’s Why I’m Fearful of a Potential Change of Ownership!

Buffett buying Southwest is pure speculation at this point.  However, it’s not completely out of the realm of possibility.  He currently owns ~$2.8 billion worth of Southwest shares.  As of this writing, the airline is currently valued at ~$35 billion.  That’s pocket change for Mr. Buffett considering his company, Berkshire Hathaway, recently reported they have ~$116 billion in cash.

So why am I concerned about this potential acquisition?  Several years ago, Warren Buffett was quoted as saying:

The single most important decision in evaluating a business is pricing power.  If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.

That’s great thinking if you’re a billionaire looking to add to your net worth.  But what about the consumer and folks who love to get Big Travel with Small Money?

One of the reasons Southwest is so popular is because they offer cheap fares.  Just yesterday, we wrote about a Southwest fare sale!

We’ll have to stay tuned to see what happens.  In the meantime, I’ll continue taking advantage of my Companion Pass through the end of 2018!  And I’m still looking forward to Southwest flights to Hawaii!

Hat tip:   CNBC

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Very rarely do a few of my interests/worlds merge – but miles/points/travel and Berkshire/Buffett just did with this article!

I appreciate the opinion, however I would have to disagree with it. Buffett/Berkshire Hathaway’s ownership (should it ever happen – I don’t believe it will) of Southwest I do not believe would alone change anything with the way Southwest is run. If anything, it would allow them the freedom to possibly try more/new/different initiatives that Southwest is currently constrained by now, being a public company with shareholders critiquing the company quarterly.

Berkshire would want Southwest’s management to run the company to ensure the long term return of capital for Berkshire shareholders. Killing off various “perks” or changing the pricing or culture of Southwest (and thus alienating customers) will likely not be in anyone’s best interest. Eliminating low-cost fares and playing the full-price fare game puts them in big competition with everyone else – something I think they would want to stay away from.

I actually think ownership (still unlikely) under Berkshire may allow Southwest’s leadership to expand and try new things – basically allow everyone to relax a little and plan for the long term success and growth of Southwest.

Click-bait article, nothing more here. Less to do even who it is about but peddling FUD is bad journalism. Disappointing.

Emily/Keith/author,

I happen to like this blog, so please stick to real useful travel info/topics. Leave the speculation to the BS gurus(Fox, CNN, etc). There’s enough of them.

Have a good one.

Author

Thanks for commenting!

I have to disagree with you here. Warren buys company’s that have a good management team. I have followed him for years and have never heard of him interfering even in times of scandal. (Wells Fargo).

I agree with you Rodney. Warren is a phenomenal businessman and I believe he will not change the business model they have.

Author

Thanks for commenting! I don’t think it’s a matter of him interfering with management. But if he pays a premium for the company, he’d be expecting a return on his investment. And if you don’t cut expenses, you have to increase prices.

Greetings Keith, keep your daytime job… SWA is consistently one of the most profitable domestic carriers. Your remarks with respect to a possible berkshire purchase are misinformed. Please keep your ignorance to yourself.

Author

Hi James — the potential Berkshire acquisition has been talked about for quite some time since he took a large stake in the airline last year. Thanks for commenting!

Keith, you are so patient with these bratty commentors! I love the blog, keep up the good work.