LEGENDARY investor Warren Buffett once used the defence of temporary insanity to explain a failed investment in a US Airlines in the late 1980s.
Now whenever he gripped by the temptation to invest in an Airlines stock, the sage of Omaha says he dials a toll-free number so a counsellor at the other end of the line can talk me down.
The Airlines industry, with its curious allure, has confounded the world’s most astute investors, who have repeatedly tripped up on its huge fixed costs, strong and sometimes militant unions, and wild gyrations in commodity prices, particularly for aviation fuel.
Buffett, though might be tempted to take a second a look at frequent flyer schemes.
Many of these loyalty programs churn out massive profits, even as the Airlines businesses that host them are awash in red ink.
Announcing a 2014 underlying loss of $212 million last week Virgin Australia chief executive John Borghetti said the Airlines would sell a 35 per cent…