Could Warren Buffett Buy Southwest Airlines? Investors Think So

Southwest Airlines stock rose Thursday after chatter swirled of billionaire Warren Buffett potentially buying the airline.

The Dallas Morning News reports that speculation of Buffett's Berkshire Hathaway purchasing the Dallas-based airline is "unconfirmed," but that the company has looked into new business ventures lately. Buffett told shareholders last week his company is getting set to make "an elephant-sized acquisition," leading some investors to believe Southwest would be that purchase.

Fortune magazine stated Southwest Airlines stock (LUV) rose 4.1 percent Thursday to $56.04 per share after this tweet from StockTradersNET.

Southwest Airlines issued a statement Thursday in reference to a possible takeover in shares by Berkshire Hathaway.

"There has been speculation circulating that Warren Buffett might be looking to acquire an airline for some time and that Southwest might be a good fit," the airline stated. "As a policy, we do not comment on speculation, but appreciate Berkshire's continued support of Southwest Airlines."

The Morning News reported that Berkshire Hathaway holds 9.9 percent of the Southwest Airlines share and that the company bought shares in four of the largest airlines in the United States during 2016.

In a letter to stockholders, Buffett said Berkshire Hathaway finished 2018 with $112 billion between cash and U.S. Treasury bills, and "another $20 billion in miscellaneous fixed-income instruments."

The letter states the company pledges to keep $20 billion in cash, with the remaining $100 billion for acquisitions. Buffett also recently told investors his company is looking more at buying businesses to complement their already-burgeoning bottom line.

"In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own," Buffett said. "The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects."

When talking about making the elephant-sized purchase, Buffett wrote, "just writing about the possibility of a huge purchase has caused my pulse rate to soar."

The top six companies owned by Berkshire Hathaway, according to Investopedia, are:

• McLane Companies
• Burlington Northern Santa Fe LLC (BNSF)
• Geico
• Berkshire Hathaway Reinsurance Group
• Lubrizol Corporation
• PacifiCorp

Berkshire Hathaway already has several businesses in Texas, especially in the Dallas-Fort Worth metropolitan area. It recently purchased real estate giant Ebby Halliday for about $100 million and also owns boot company Justin Brands, masonry company Acme Brick, electrical distributor TTI, Houston-based Star Furniture, several automobile dealerships and newspapers.

The rumor of Berkshire Hathaway possibly buying Southwest Airlines comes one day after the airline announced it will now begin scheduling flights to Hawaii from its West Coast connections.