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Southwest shares gain after Buffett takeover rumor

Key Points
  • Southwest shares rise about 4 percent after rumor circulates that Warren Buffett is considering a takeover bid for the airline.
  • Buffett's Berkshire Hathaway is one of Southwest's biggest shareholders.
  • The airline acknowledges the rumor but declines to comment.
A Southwest Airlines jet leaves Midway Airport in Chicago, Illinois.
Scott Olson | Getty Images

Southwest Airlines shares surged more than 4 percent on Thursday after a rumor circulated on Twitter that billionaire investor Warren Buffett wants to acquire the remaining shares of the low-cost airline.

Buffett's Berkshire Hathaway is already Southwest's second-largest shareholder and had an 8.7 percent stake worth more than $2.2 billion, according to Berkshire's annual letter released last week. Berkshire Hathaway is also one of the largest shareholders in Southwest's competitors Delta Air Lines, United Airlines and American Airlines.

"$LUV talk Berkshire Hathaway seeking to acquire remaining shares of Southwest" at $75 a share, said a tweet from Twitter user StockTraders.net, a trading portal. It called the talk "unconfirmed." Southwest shares closed at $56.04 on Thursday.

Southwest acknowledged the rumor but declined to comment.

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"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," Southwest said in a statement. "As a policy, we do not comment on speculations but appreciate Berkshire's continued support of Southwest Airlines."

Berkshire Hathaway did not immediately respond to a request for comment.

A year ago, Buffett, Berkshire's CEO, told CNBC that he "wouldn't rule out owning an entire airline," sparking some speculation that Dallas-based Southwest could be the one as Buffett hunts for a large deal.

The rumor came a day after Southwest announced it finally received federal government approvals needed to fly to Hawaii.

Hawaii will make up half of Southwest's planned 5 percent increase in flying this year, the airline said last month.

Southwest first announced its plan to serve Hawaii in October 2017 and has been waiting for a green light from the Federal Aviation Administration, a process that was delayed in the 35-day partial government shutdown that furloughed safety inspectors at the agency.