What happened

Shares of Southwest Airlines (NYSE:LUV) took flight on Monday after the stock received an upgrade from a key Wall Street analyst. Southwest shares were up 7% as of midday EDT.

So what

Southwest and other airlines have been hit hard by the COVID-19 pandemic, which has caused travel demand to evaporate and has caused the industry to scramble to raise cash and cut costs. Southwest has never had to resort to layoffs or furloughs during its 49-year history, but the airline has warned that streak could be in jeopardy if conditions do not improve in the months to come.

A Southwest Airlines 737 in flight.

Image source: Boeing.

The shares are getting a boost Monday after Goldman Sachs analyst Catherine O'Brien turned bullish, moving Southwest from a sell to a buy and raising her price target to $47 from $35. O'Brien said Southwest's domestic-focused network should recover faster than more internationally focused rivals, and noted Southwest's "industry-leading" balance sheet as a strength during the downturn.

Southwest also likely got a boost from news that Boeing is making progress getting its 737 Max airborne again. Southwest only operates 737s, and while the pandemic has lessened the near-term need for new planes, the Max remains a key part of the airline's long-term growth plan.

Now what

I'd agree that Southwest is the safest U.S. airline stock to buy due to the reasons O'Brien cited. Even if the rise in pandemic cases causes a return to March and April traffic lows, Southwest has funding to last about two years, which should be enough to weather even a severe downturn.

Just be warned that Southwest is likely to need a good bit of that cash. Although the airline is well insulated against a potential bankruptcy, it is going to be difficult for Southwest or any other airline to soar until the pandemic is behind us and we have a better idea of its long-term impact on the economy.

If you do buy into Southwest or any other airline stock, make sure to keep your seat belt fastened and be prepared for turbulence.

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.