Berkshire’s Delta Bet Shows Why Quality Matters in Airline Stocks

Quality airlines are better positioned than the sector as a whole to recover from the current jet-fuel shock because refining margins should ease, pricing remains firm, and balance-sheet strength matters.

• Berkshire Hathaway disclosed a $2.6 billion Delta Air Lines stake at the end of March, increased it by 44% in the second quarter to about 57 million shares, and held a position worth roughly $5.4 billion at the end of June.
• Over five years, the NYSE Arca Airline Index lost about 31% including dividends, while energy stocks gained more than 192% and the S&P 500 returned about 86%; the airline index had recovered most of its losses before the Hormuz closure roughly doubled jet fuel prices.
• New York Harbor diesel futures, a proxy for U.S. jet fuel, were around $5 a gallon for September 2026 versus $3.73 for June 2027; only one-third of the implied relief comes from crude, while two-thirds comes from a projected contraction in the refining premium.
• U.S. airlines largely abandoned fuel hedging: Southwest ended its program in late 2025, whereas Lufthansa hedged 86% of its 2026 fuel and Ryanair about 80% of next year’s needs at prices based on $67 oil.
• Delta’s Philadelphia-area refinery could reduce fourth-quarter fuel costs by around $0.40 a gallon, and its operating income covers interest expense more than eight times, while American’s operating income does not currently cover interest; Delta, United and Southwest trade at roughly 9 to 11 times forward earnings versus about 20 times for the S&P 500.

Takeaway: Investors should focus on financially stronger airlines such as Delta rather than buying the sector indiscriminately, while recognizing that a prolonged Middle East conflict, higher Treasury yields or a diesel-export ban could keep fuel costs elevated and invalidate the futures-market relief scenario.