What happened

Airline stocks are flying through turbulence right now, bouncing up and down based on sentiment about how long the COVID-19 pandemic will halt travel and how quickly demand for flights will recover.

On Monday, optimism dominated Wall Street, and airlines at least initially got caught in the updraft. Shares of JetBlue Airways (JBLU -1.27%) and Alaska Air Group (ALK -1.66%) both gained more than 10% early in the day, and United Airlines Holdings (UAL -4.57%), American Airlines Group (AAL -1.40%), and Delta Air Lines (DAL -2.89%) were all up more than 5%.

All of the stocks gave up some of the gains as the day wore on, and Delta actually turned slightly negative due to company-specific news, but there is a feeling of hope riding with the airlines on Monday.

So what

Airlines have been hit hard by the pandemic, with travel demand all but disappearing overnight. They have cut flights and grounded planes to try to trim costs, but no amount of cutting can offset no revenue coming in the door.

The U.S. government came through with $50 billion to support the industry, but that cash will only last for so long. After plunging for weeks, airlines have stabilized somewhat since the bailout became law. But investors remain worried that if traffic does not return in the months to come, bankruptcies are possible.

Planes parked at the airport.

Image source: Getty Images.

Monday was a relatively upbeat day, with markets encouraged that the rise in COVID-19 cases in major hot spots seems to have slowed over the weekend. That at least allows for hope that the pandemic could be contained by late spring, and the economy could start normalizing as soon as the summer.

The industry also likely got a boost from research notes from both J.P. Morgan and Citigroup that, while cautious, assumed the airlines would be able to survive without bankruptcies.

Delta was the weakest of the major airlines on news that Berkshire Hathaway had sold part of its stake in the airline, barely a month removed from adding shares. Berkshire and Warren Buffett don't have the reputation for quickly moving in and out of positions, and the rapid reversal seems to have spooked investors hoping for a quick recovery.

Now what

It's worth noting Berkshire still has a substantial position in Delta. So even if the company and its famed investor aren't bullish on a quick rebound, from what is known, they are not predicting gloom or doom, either. Which feels about right: The airline sector is severely troubled right now, and in the worst case could end up with liquidations, but there is at least some reason for hope that a slow, gradual recovery is more likely.

For now, expect the airlines to trade up and down, not just on company- and industry-specific news but on updates on the pandemic and its impact on the U.S. economy as well. There will be good days, like today, and there are likely to be further down days, but for investors who can stomach the volatility and hold for the long haul, I continue to believe it is safe to consider airline stocks.