What happened

Airline shares drifted lower on Monday along with the broader markets as investors appear to be having second thoughts about the speed with which the U.S. economy is reopening and the long-term implications of the COVID-19 pandemic. Markets, and airline stocks, were in the green last week as states began to talk about how to reopen, but it is clear there will be no quick recovery.

Shares of United Airlines Holdings (NASDAQ:UAL) opened down 7.7%, while Delta Air Lines (NYSE:DAL), American Airlines Group (NASDAQ:AAL), and Southwest Airlines (NYSE:LUV) all opened down 5%. The shares recovered some of those losses by midday, but it looks like another volatile day for airline stocks.

So what

Airlines have been hit hard by the pandemic, with the U.S. industry losing billions in the first quarter and expecting even worse losses in the second. The industry has grounded planes and cut schedules, and airlines have added liquidity through equity sales, debt offerings, and government support, but they still face an uncertain future.

Airplanes parked at an airport.

Image source: Getty Images.

The airlines have enough liquidity to get through the summer, but at some point will need traffic to return to avoid a cash crunch. Until we have more clarity on when post-pandemic normalization will occur, and what the economy will look like when it does reopen, there are going to be doubts hanging over the shares. For now, it appears the major airline shares are moving up and down with broader market sentiment about the recovery.

Abroad, the news is not much better. International Consolidated Airlines Group CEO Willie Walsh told United Kingdom regulators on Monday that he does not expect operations to return to pre-pandemic levels until 2023 or 2024 and said it could be 2026 for some. Walsh has a good view at the pan-European outlook, as his company is the parent of British Airways, Spain's Iberia, and Aer Lingus of Ireland, among other airlines.

Although the U.S.-based airlines are more focused on when domestic markets will reopen, sustained weakness in transatlantic flying would cost American, Delta, and United the opportunity to generate more lucrative international business.

Now what

The good news for airline investors is the seemingly daily 10% drops at the height of the crisis may be in the past, but it is going to be hard for the stocks to really gain momentum with so much uncertainty about where things go from here. At best, we are likely looking at a multi-year recovery, and the stocks are unlikely to bounce back as quickly as the broader economy.

It is safe to invest in airlines, thanks to the liquidity infusion the sector has received in recent weeks. But given the risks that remain and the number of unknowns, investors who dare to buy in should stick to top performers including Delta and Southwest and avoid some of the industry's more questionable names.

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.