Treasury secretary’s comments compound woes for airline sector hit by Buffett share sale
Steven Mnuchin, the US Treasury secretary, said it was “too hard to tell” if the US will loosen international travel restrictions affecting Asia and Europe this year, even as measures limiting domestic economic activity are lifted.
US President Donald Trump was “looking about ways to stimulate travel”, Mr Mnuchin said, but he suggested this effort would initially be limited to travel within the US. T
he comments, in an interview with Fox Business Network on Monday, compounded a sell-off in airline stocks triggered by news over the weekend that Warren Buffett had sold his entire investment in the sector.
The country’s three largest carriers — American Airlines, Delta and United — were the three worst performing stocks in the US S&P 500 index in lunchtime trading in New York, each down at least 8 per cent. Southwest Airlines, in which Mr Buffett’s Berkshire Hathaway had also been a major shareholder, was down more than 7 per cent.
“It turns out I was wrong,” Mr Buffett said during Berkshire’s virtual annual meeting on Saturday, explaining the decision to sell $6bn in airline stocks. “The airline business — and I may be wrong and I hope I’m wrong — I think it has changed in a very major way.
” For business people that do need to travel, there will be travel on a limited basis. But this is a great time for people to explore” America Steven Mnuchin, US Treasury secretary
Airlines worldwide have sharply reduced capacity as governments have issued stay-at-home orders and travellers have chosen to stay home to curb the spread of Covid-19.
As the threat of the coronavirus pandemic emerged in late January, Mr Trump banned foreign nationals from entering the US if they had recently travelled to China — and imposed similar restrictions on European countries in March. The failure to lift those bans throughout the summer months would mark a further blow to the global travel and hospitality sector.
Asked on Fox Business if international travel would be “opened up this year”, Mr Mnuchin said: “Too hard to tell at this point. I hope down the road it is . . . Our priority is opening up the domestic economy.”
He then added: “Obviously, for business people that do need to travel, there will be travel on a limited basis. But this is a great time for people to explore America.” Mr Mnuchin also said he expected a “difficult” second quarter for the US economy, which has been hit by widespread lay-offs that have left more than 30m people unemployed.
Conditions would be “better” in the third and fourth quarters, but a sharp improvement would only come in 2021, he said. “As the president said, we’ll be back to a great economy next year,” Mr Mnuchin said.
Source: Finanacial Times
