In this monologue, Chris Haroun explains why he is generally skeptical of U.S. airline stocks, citing their heavy exposure to oil price volatility. He uses Southwest Airlines as a case study, describing its aggressive oil‑hedging program in the early 2000s that insulated the carrier from soaring crude prices but also locked it into higher costs when oil fell. Haroun notes that Southwest leveraged this hedge to cut fares and pressure competitors during the 2008 oil price spike, a strategy he characterizes as predatory. Shifting focus, he argues that airlines in emerging markets—particularly in Brazil, Chile, and other BRIC economies—offer more attractive growth prospects. He likens Latin American aviation in the early 2000s to the U.S. airline boom of the 1960s, when airlines were high‑growth, not value, stocks. Haroun shares his personal investment experience, mentioning stakes in Brazilian infrastructure and airline firms, as well as related businesses like car‑rental company Localiza, underscoring his preference for non‑U.S. airline equities.
Chapters
Do you think it's a good idea to invest in the airlines now? Yeah. So I, I'm not a big fan of the airlines. I've rented them before when I worked in the hedge fund industry as. As shorts and sometimes longs, but more so shorts. Yeah, yeah. It's tough. You got to do your own research and you got to also look at so many different factors, like the price of oil, for example. But let me tell you something about Southwest Airlines. This is. You're going to love this. It's fascinating. So Southwest Airlines, which is a discount carrier similar to Ryanair in Europe, Southwest Airlines based United States Ticker Luv, because their headquarters are in Texas, Lovejoy Field. Southwest Airlines, what they did in the early 2000s was they realized that, you know, my goodness, if oil goes up a lot, it's going to hurt our company and our profits. And. And so what Southwest Airlines did was they hedged the price of oil. Okay. To the extent that it doesn't matter. It didn't matter at that time for a decade or so. If the price of oil went to 150 bucks a barrel, they would always get it for 30 bucks a barrel. And it was a risk, too, because oil went down at 10 bucks a barrel, they still had to pay 30 bucks a barrel for a decade. But what happened was they did that, and then in 2008, the price of oil, right before the financial crisis peaked in the super cycle at 150 bucks a barrel. And what they did, Southwest, is very predatory. They started cutting prices to kind of push the other airlines into bankruptcy. Right. So I don't like airlines as a business. They're too exposed to commodities. Yeah. So not a big fan. But I am a big fan of airlines in other countries, not American airline companies, and I'll tell you why. So I used to invest a lot in Latin America. And I remember, I think it was.05 or 06, whatever it was. Looking at Brazil, for example, which I love, and I remember thinking, Brazil has a lot of great infrastructure companies and airline companies. And also in Chile with LAN Airlines, for example, a lot of great companies that are similar to America in the 60s. Let me explain what that means. In the 1960s in America, the airlines were a wonderful growth industry. They were growth stocks, not value. Right. Not like. And not widowmakers. Right. They were great investments. They were growth stocks. And so when I looked at Latin America in the early 2000s or whatever it was, I saw Latin America as kind of like the US in the 60s. Right. And so I did invest in airlines down there and even in Latin America. I invested in a lot of real estate companies in Brazil, like Gefisa and C, as well as Localiza, which is a wonderful car rental company. Yeah. So I'm not a fan of the airlines in America, but I am a fan of airline stocks in other countries that are emerging markets or brick economies, which Goldman Sachs coined when I worked there. Brick stands for Brazil, Russia, India and China. Less of a fan of. Of. Of Russia these days. Yeah.
