Southwest Airlines: Warren Buffett’s Rumored Buyout

Recently, there have been rumors that Warren Buffett is considering the outright purchase of Southwest Airlines after Buffett indicated during a CNBC interview that he would not rule out the prospect of owning an entire airline and online rumors suggested that he was in communication with Southwest’s Board of Directors about purchasing Southwest outright for $75 per share.

I will say this about the speculation: If Buffett is contemplating purchasing an airline, it will almost certainly be Southwest. As you may know, Southwest is unique in that: (1) it has a strong cash-positive balance sheet with $3.6 billion in cash and $3.3 billion in debt; (2) it has no preferred stock outstanding or any pension that would require perpetual redress; and (3) Southwest has not had an unprofitable year aside from the 9/11 aftermath, and even managed to earn profits of $140 million to earn $140 million in profits in … Read the rest of this article!