What happened

We've been saying for a while now that airline shares are likely to rise and fall based on sentiment about how quickly the COVID-19 coronavirus pandemic will be contained and how severe its impact on the economy will be. Wall Street has adopted an optimistic tone in recent days, and that mood is having an oversize impact on airline stocks.

Shares of American Airlines Group (NASDAQ:AAL), Spirit Airlines (NYSE:SAVE), Hawaiian Holdings (NASDAQ:HA), and JetBlue Airways (NASDAQ:JBLU) all gained more than 20% on Tuesday morning, while shares of United Airlines Holdings (NASDAQ:UAL), Southwest Airlines (NYSE:LUV), Alaska Air Group (NYSE:ALK), and Delta Air Lines (NYSE:DAL) were all up double digits as of 10 a.m.

It's a great day to be invested in airlines. But can it last?

So what

The airline sector has been devastated by the pandemic, with demand for travel disappearing overnight. Carriers have reacted by cutting upward of 80% to 90% of their schedules, grounding planes, and freezing hiring, but with revenue expected to be down 90% year over year, no amount of cuts ensure the companies will remain solvent.

The industry got a lifeline from Washington in late March in the form of $50 billion in loans and grants. That money buys the airlines time and shifts the focus toward questions of how long the pandemic will last and how it will affect the economy.

An airplane taking off.

Image source: Getty Images.

We still don't know the answer to that question, but markets have jumped in recent days on signs that the pandemic might have peaked in hard-hit areas, including New York. If so, it is at least possible the economy, and with it travel, will begin to normalize heading into the summer and airlines will soon see an uptick in revenue coming through the door.

The top gainers on Tuesday are some of the airline stocks hardest hit by the pandemic. American was particularly vulnerable among the major airlines due to its industry-high debt load, while Hawaiian has a unique, high-cost route network and was forced to ground much of its fleet after the state of Hawaii issued a quarantine.

Spirit, meanwhile, is a smaller airline with a relatively high debt load, and JetBlue has been trying to cater to premium fliers who might be tougher to reach in a recession.

Now what

As an airline shareholder I'm enjoying these gains as much as anyone, but be warned: The turbulence is likely far from over. We're only one headline about a virus flareup from reminding markets how serious the situation is, and even in the best-case scenario it seems unlikely we'll be able to flip a switch and restart the U.S. economy.

I'm skeptical of both the best-case and worst-case scenarios at this moment. I doubt we will see a quick recovery and travel demand will return to pre-pandemic levels at all this year, and demand could lag into 2021. That said, I am hopeful that we will begin to see more normal demand, albeit at recessionary levels, in the months to come.

For investors that means it is safe to put your money in airlines, but you should expect more down days along with these spikes higher. I'd stick to top operators, including Southwest and Delta, and buckle in and prepare for a long flight.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.