WhatThe? wrote: ↑
Sun May 10, 2020 9:59 pm
Anyone have a readable version of Peter Letko acticle?
It was in some gibberish language!
Peter Letko confident about air travel, says Buffett is wrong
PHOTO OLIVIER JEAN, ARCHIVES LA PRESSE
Peter Letko (left) and Daniel Brosseau, co-founders of Letko Brosseau
The confidence of Montreal asset manager Peter Letko in air transportation remains very strong despite the crisis, despite the public disavowal of famous investor Warren Buffett towards the industry last weekend.
Posted on May 9, 2020 at 11:00 a.m.Share
Richard DufourRICHARD DUFOUR
Warren Buffett announced a week ago, at the annual Berkshire Hathaway meeting, that the conglomerate he heads had just liquidated his shares in air transport. Berkshire Hathaway was the largest shareholder in Delta and the second largest in Southwest, American and United.
Warren Buffett admitted that he made a mistake in 2016 by investing again in air transportation.
“I have a lot of respect for Warren Buffett. But we have invested in air transportation long before him. I think he lost a lot of money when we did a lot of it, ”says portfolio manager Peter Letko of Letko Brosseau & Associates.
I understand why [Warren Buffett] did this [selling his airline stock], but this is not the first time I have disagreed with him.
The largest shareholder in Transat and Air Canada, Letko Brosseau sold a portion of its Air Canada shares three years ago. The firm bought its first shares of Air Canada during the financial crisis, a decade ago.
Last spring, Letko Brosseau opposed the preliminary proposal of $ 13 per share from Air Canada for Transat, because the firm judged that the Montreal tour operator was worth "much more". Air Canada finally agreed to increase its offer to $ 18 per share.
“Warren Buffett's mistake was that he bought his airline stocks too late. The result is that it takes losses by selling, ”says Peter Letko.
“We were WestJet's largest shareholder and last year sold our shares in this carrier at a great profit. It worked for us. We have a very different opinion [from that of Warren Buffett]. "
In revealing last weekend that he had abandoned air travel, Warren Buffett said that "the world has changed".
"We think about that a lot," admits Peter Letko. It is very possible that people become more careful and think more before flying. But if a vaccine is found, people will go back to their habits. Except maybe business people because of the current use of teleconferencing. However, it is too early to say that everything will change. People love to travel, visit and see other people. "
Peter Letko certainly does not intend to stop flying. “I have had this taste since I was very young. The important thing is the discovery of a vaccine. I will be ready to resume a commercial flight when a vaccine is offered. "
Asked about his level of confidence that Air Canada's purchase of Transat would materialize, Peter Letko displayed some skepticism. " Frankly I do not know. With everything that just happened, we really don't know. The transaction is still attractive to Air Canada. But a lot has changed. The government may impose conditions and Air Canada may find them too stringent. "
With Transat's share at $ 8, the market is certainly raising doubts. "It tells us there are risks, of course," admits Peter Letko. But look what just happened. Almost all of the planes are grounded today. This is not something that we could have anticipated when the transaction was announced. So it's normal. "
According to him, Air Canada does not need Transat's capacity at the moment. “But maybe in a year or more, though. A health development, like the discovery of a vaccine, could quickly turn the tide, ”he says.
Letko Brosseau is also still a shareholder in Bombardier and Mr. Letko believes that the pandemic could have an impact on demand for private aircraft, such as business jets manufactured by Bombardier. Perhaps more and more people who can afford it will want to travel on private jets, he believes.
Regarding the negative impact that a recession could have on demand for aircraft manufactured by Bombardier, Peter Letko responded that it would depend on the length of this recession.
If he says he does not know the new CEO of Bombardier, Éric Martel, Peter Letko has agreed to give his appreciation for the passage of Alain Bellemare at the helm of the company.
“It was a difficult time. He had a great challenge to face with the development of the ex-C Series. It took more time and more money. It's really a shame that these devices are now in the hands of Airbus. And it's a shame for all of us here in Quebec who have participated in one way or another in the development effort. It's a shame and even a little sad. "