Warren Buffett’s big bet on United Airlines could be costing him millions

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Article written by Tomi Kilgore at MarketWatch

MW-FK215_Warren_20170411125925_ZHWarren Buffett probably cringed more than most when he saw the video of a passenger being dragged off a United Airlines plane, because it could be costing him millions of dollars.

The famed billionaire investor’s Berkshire Hathaway Inc. BRK.B, -0.37%  became the largest shareholder by far of the United parent’s United Continental Holdings Inc. UAL, -0.66%  at the end of last year. Berkshire bought about 24.42 million United shares during the fourth quarter, to bring his stake to 28.95 million shares, or 9.2% of the shares outstanding, according to the latest filings with the Securities and Exchange Commission.

With United’s stock falling 81 cents, or 1.1% on Tuesday, Buffett could be losing about $23.5 million, if his holding remained unchanged. At the intraday low of $68.36, the stock was down $3.16, or 4.4%, and Buffett was losing $91.5 million.

A man was dragged off an overbooked United Airlines flight from Chicago O’Hare to Louisville, Ky, on Sunday night after agents couldn’t find volunteers to leave the plane and selected four passengers at random. A passenger captured video of the ordeal. Photo: Tyler Bridges via Storyful

United’s shares had initially gained some ground on Monday, after videos and news reports of United’s forced removal of a bloodied passenger who refused to be bumped from his flight went viral. United’s stock turned sharply lower, however, as criticism of the incident, as well as of Chief Executive Oscar Munoz’s response to the incident, intensified around the world

Don’t miss: United Airlines skewered on social media as overbooking backlash intensifies.

See also: White House says removal of passenger from United Airlines was troubling.

United’s upbeat report on March traffic failed to appease investors. And the fact that the latest public-relations snafu came just a couple weeks after the public backlash over United’s refusal to allow two girls wearing leggings to board a plane, only increased investor scrutiny.

Buffett may now be regretting the big bet he made on airlines at the end of last year. United’s stock has lost $2.17, or 3%, year to date, which could be costing Buffett $62.8 million.

Besides the five-fold increase in his United investment, Buffett also more than doubled his stake in American Airlines Group Inc. AAL, +1.12%  to 45.54 million shares, boosted his bet in Delta Air Lines Inc. DAL, +1.20%  by nearly 9-fold to 60.03 million shares and initiated a 43.20 million-share stake in Southwest Airlines Co. LUV, +1.42%  Read more about Buffett saying he wouldn’t add to his airline bets.

That made Berkshire Delta’s largest shareholder with an 8.2% stake, according to FactSet. It was American’s second-largest shareholder with a 9.0% stake and Southwest’s second-largest investor with 7.0% of the shares outstanding.

Southwest’s stock has climbed 10.5% year to date, but American’s has shed 5.9% and Delta’s has dropped 7.9%. If his stakes remain the same, he could be losing a total of $197.1 million on his airline investments.

Don’t miss: Warren Buffett loves cheap airline stocks, which could get a boost from Trump.

The NYSE Arca Airline Index XAL, -0.21%  has tacked on 0.5% so far this year, and has rallied 23% over the past 12 months. Meanwhile, the S&P 500 index SPX, -0.31%  has gained 5.1% year to date and 15% over the past year.

We’re all Instructors

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Reshared Article;

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Plenty of people saw this coming. The financing options for pilot training rapidly dried up when the 2008 economic crisis hit, and for a number of years, relatively few people had the wherewithal to pursue flying. As a result, there weren’t many new pilots created in the 2008-2012 time frame. Meanwhile, professional aviators continued to age out, retire, pass away, lose medicals, change careers, and so on.

So if you’re an aspiring pilot seeking an experienced instructor, you might find the pickings are rather scarce. Ironically, the odds of finding a highly qualified CFI are probably better if you’re looking for some kind of specialty training, since teachers in those nooks often make a career out of it.

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Jon Rapp shares his perspective, follow the link below to read more.

Source:

https://blog.aopa.org/aopa/2016/09/01/were-all-instructors/?utm_source=ePilot&utm_medium=Content&utm_content=blog&utm_campaign=160901epilot

Michael Zaporzan

DOT Grants Norwegian Permit to Begin US Services

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“Norwegian Air International (NAI) has been granted approval to begin flights between Ireland and the US after a three-year process in which the US Department of Transportation (DOT) seemed reluctant to give the go-ahead despite being unable to find any legal reason to reject the application.”

Great news posted on aviationvoice.com click below to read more.

Article source: https://aviationvoice.com/dot-grants-norwegian-permit-to-begin-us-services-201612050952/ 

Michael Zaporzan

A Pioneer Goes West

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The article below written by Ron Rapp of Rapp.org is well written for aviation legacy; Arnold Palmer. Give it a read for some perspective on Arnold and the band of brothers in the aviation business.

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by Ron Rapp on November 1, 2016 in Aviation

There are many big names in the general aviation world: King, Collins, Klapmeier, Poberezny, and so on. But Arnold Palmer was something unique, even among the giants in our industry. I think his achievements in the air may have matched anything he accomplished on the golf course.
Think that’s crazy? Let’s look at the evidence.
Everyone knows the highlights of Palmer’s sports career, but how many aviators do you know who soloed in six hours? That’s not a typo. I’m fairly certain I was still trying to figure out how to start the engine properly at the six hour mark (some might argue that I’m still working on it 8,000 hours later… but that’s a topic for another time). If my CFI had tried to cut me loose at that point – not that there was any danger of this actually happening, mind you — I would have been the one pulling on his shirt tail as I hauled him back into the cockpit. What’s the old saying? “A man’s got to know his limitations”. Read More.

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Source: http://www.rapp.org/archives/2016/11/a-pioneer-goes-west/

Michael Zaporzan

Understanding The Angle-Of-Attack Indicator

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Aviationweek.com has brought forth this excellent article and provides area to discuss the article at length – highly recommend the read.

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The FAA has been actively promoting angle-of-attack (AoA) indication systems as a means of reducing general aviation loss of control (LOC) accidents for several years. An analysis of nearly 2,500 general aviation accidents that occurred from 2001 to 2010, mostly in light aircraft, pointed to LOC as the leading cause of the mishaps, which killed 1,259 people during that period. LOC accidents continue to kill about 175 people in general aviation aircraft every year… read more.

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Source: http://aviationweek.com/business-aviation/understanding-angle-attack-indicator?eid=forward

Michael Zaporzan

The Future of Avionics is an SD Card?

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According to Flyingmag.com, the future of avionics is an SD card. Have we really come this far? The possibility is unreal, but is it safe?

“The next avionics breakthrough from Garmin has arrived. It looks like a typical SD card that you might use to upload navigation data to your GPS receiver, but it’s oh so much more than that. The Flight Stream 510 MultiMediaCard (MMC) provides wireless connectivity between the Garmin Pilot app and GTN 650/750 touchscreen navigators with no remote unit to install, no wiring and no antennas to worry about. Amazingly, this one tiny card does it all.” …read on below.

The Future of Avionics Is a Card?

Michael Zaporzan

Demand for Pilots Expected to Soar

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Demand for Pilots Expected to Soar by Michael Zaporzan

Air travel has become more popular and prevalent than ever before. To keep up with increasing demand from the public, airlines will be expanding their fleets and flight offerings which means the need for key staff, especially trained pilots, is going to skyrocket.

Boeing alone is planning on adding 39,620 aircrafts to their global fleet by 2035, an initiative valued at $5.9 trillion. According to a forecast by Boeing Co., this will require recruiting some 617,000 pilots, or 30,850 pilots a year for the next two decades, to keep pace with these new planes on order.

On top of that, carriers will be working against the clock as they struggle to replace pilots entering retirement, staff up to comply with stricter federal limits on duty hours, and fulfill staff needs for new routes to Cuba and Latin America.

Boeing predicts there will be the need for 1,12,000 new pilots in North America over the next 20 years. Furthermore, they see some 1,04,000 aviators required for Europe as travel continues to grow between countries on the continent.

As China overtakes North American as the largest travel market, the Asia-Pacific region is expected to account for about 40% of total new hires. And the Middle East is forecasted to need 58,000 pilots over the two decades, about 2,000 fewer than Boeing forecast a year ago. Flying within the Middle East region is changing as countries shift away from very large aircraft likeAirbus’s A380 superjumbo towards smaller models.

The life of a pilot isn’t easy, but if you’re already in the field or looking to get into it in the coming years, it’s an especially good time for the industry.

The FAA Issues New Rules About Commercial Drone Usage

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The FAA Issues New Rules About Commercial Drone Usage

There have been a lot of opinions going around over how/when/where commercial drones should be used. Some say there should be regulations in place to prevent drones from flying over private property without permission, others claim the right to the sky shouldn’t be inhibited by what’s below. Drones for personal and commercial use are a relatively new phenomena, and there has been no federal law that governs drones and addresses privacy concerns, until now.

Last week, the U.S. Federal Aviation Administration (FAA) released a list of rules for commercial drone usage that should begin to help us all gain a better understanding of where the future of drone usage is heading.

The recent rules laid out by the FAA are specific to unmanned aircraft weighing less than 55 pounds and flying no more than 400 feet above ground. Their main stipulation is that they require drones to remain within the visual line of sight of the pilot. Remote pilots are required to hold a remote pilot airman certificate.

There are currently at least 46 bills and regulations in different states governing drones from the state level. Some regulate data collection and use, others are aimed at preventing any interference in legal hunting/fishing, and many focus on the issue of voyeurism, especially is areas popular to celebrities and public figures. The introduction of federal laws will preempt (i.e. invalidate) state and local laws.

The National Telecommunications and Information Administration (NTIA) has issued General Best Practice Guidelines which are meant to address privacy protection issues from a national level (they essentially tell drone operators to give notice before flying, to secure data that is collected and not to share it, and to comply with state and local laws); however, they are currently voluntary guidelines.

There are no protections in place that would allow a homeowner to claim property right to the aerospace surrounding their property, since the FAA technically owns the aerospace. However, property owners can file complaints should a drone owner be violating local laws in place such as causing a nuisance or flying recklessly. The only case where a property owner can claim trespassing is if the drone lands or takes off on the property without permission.

Two issues not addressed in the new laws are insurance and drones for delivery. Currently, commercial drones are not required to have insurance (an issue many would have liked to seen addressed.) While the new rules mandate that drones stay within the visual line of sight, it is only for drones flying 400 ft and below. This leaves the aerospace between 400 and 500 ft wide open and just happens to be the proposed air route for package delivery being eyed by Amazon.

Local laws vary greatly from area to area and state to state, so make sure you’re checking in with your local government to ensure you’re flying your own drones lawfully, and so you know your rights should a neighboring drone owner overstep their bounds.

 

Can we keep drones off private property?

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Can we keep drones off private property- by Michael Zaporzan

According to the Federal Aviation Administration, drone sales are expected to increase from 2.5 million this year to a whopping 7 million by the year 2020. Although these sales may be fantastic news for drone makers, it also means there will soon be a need to create laws regarding drones flying over people’s private property. Should it be legal for drones to fly over your property without your consent? Should they have a certain distance limit from which they cannot fly close to people’s homes? Would there be a difference in privileges between commercial drones and drones used for casual purposes? Who should make these decisions: individual landowners or organizations like the Federal Aviation Administration? As usual, these kind of legalities have resulted in different camps of thought.

There are those like University of Miami law professor A. Michael Froomkin who believe people’s privacy is in fact at risk due to drones. According to Froomkin, drones shouldn’t be given the legal right to fly over private property without first acquiring each of the landowner’s consent. Because drones can film, record sounds, and listen in on Wi-Fi and other signals, flying them over private property is a clear violation of the Fourth Amendment rights regarding privacy and safety. He explains that just as homeowners have a horizontal curtilage, where property rights include grounds and buildings in the immediate vicinity of the homeowner’s land, property owners should also have a vertical curtilage. Nowadays, according to the FAA navigable airspace usually ends at 500 feet of the private property. According to Froomkin, the same should be applied to drones.

Then there are those like University of Washington assistant professor of law Ryan Calo who believe that decisions regarding where and when drones can fly should be made collectively, not by individual landowners. According to Calo, drones are the next frontier of aviation and, just like airplanes, should answer to the FAA’s navigable airspace regulations, not to property owners. Unlike Froomkin, Calo sees drones as an essential commercial tool. Companies, like Amazon, plan to use them and revolutionize the way they deliver their products. Journalists want to use them to cover breaking news faster. The health industry wants to use them to deliver emergency medication or even organs for transplant surgeries quicker. The possibilities are endless, hence placing regulations at the disposal of individuals’ hands could truly hinder the drones’ potential. Calo goes even further, explaining that attempting to get approval from each property owner to obtain a permit would be inefficient to the point of being impossible. Even apps like AirMap simply don’t have enough time or resources to fully complete such endeavors.

The drone verdict is still out, but suffice to say that government and industry leaders are already being faced with the legal implications of these decisions, and a crowded drone airspace is just around the corner. Considering that companies like Amazon and Google are already meeting with National Aeronautics and Space Administration to design an air-traffic-control system for drones, it seems like Calo may win this argument, after all.