What happened

Airline shares took off on Monday on positive developments in the global fight against COVID-19, including a report that President Donald Trump could green-light an experimental vaccine made by AstraZeneca by October. The airlines desperately need to put COVID-19 behind them if they have any hope of really getting airborne, and hopeful medical news caused investors to buy into the stocks.

Shares of United Airlines Holdings (NASDAQ:UAL) and American Airlines Group (NASDAQ:AAL) led the sector higher on Monday, each up more than 9% as of 12:45 p.m. EDT. Delta Air Lines (NYSE:DAL), JetBlue Airways (NASDAQ:JBLU), and Spirit Airlines (NYSE:SAVE) were each up more than 8%, while Southwest Airlines (NYSE:LUV), Alaska Air Group (NYSE:ALK), Hawaiian Holdings (NASDAQ:HA), and Allegiant Travel (NASDAQ:ALGT) were all up 5% or more.

So what

Airline stocks have been hit hard by the pandemic, which caused travel demand to crater back in March and April and has kept passengers from flying through the summer. Industry revenue was down more than 80% from last year in the second quarter, and with what little demand there was tied to summer vacations airlines are bracing for further reductions in the months to come.

Airlines are doing what they can to make travelers feel safe, but consumers have said repeatedly they are unlikely to return to the skies in large numbers until there is a widely available COVID-19 vaccine. The stocks were up Monday on talk that the AstraZeneca vaccine could be ahead of schedule, and a Food and Drug Administration decision over the weekend to allow an experimental plasma therapy as treatment for COVID-19 patients.

A plane flying over clouds.

Image source: Getty Images.

Anything that can push the vaccine timetable forward would be bullish for airlines, and new treatments that hopefully make the pandemic less lethal could help encourage demand as well.

United and American are likely flying highest in the sector because among the "big four" carriers they are seen as more vulnerable than Delta and Southwest, with American in particular being watched due to its high debt load. They've also been more aggressive in trying to capture what little demand is out there, and would likely be the big beneficiaries if these headlines do lead to even a modest uptick in demand.

Shares of Southwest, Alaska, and Allegiant, meanwhile, have held up better since the pandemic began and have tended to react more modestly during the recovery as well. Hawaiian, with its niche route network, will likely see its recovery tied to the overall health of the U.S. and Asian economies once the pandemic is over, and could lag its airline rivals if Hawaii or the U.S. limits international visitors for some time after when there is a vaccine.

Now what

Investors should be careful not to get too excited about any headline concerning progress toward a vaccine or treatment for COVID-19. Investors in biotech stocks know there are a lot of moving parts in vaccine and medicine development, and promising developments don't always lead to cures.

Airlines are doing what they can to encourage people to fly, but absent a vaccine, that's a tall order. The going assumption right now is that it will be the second quarter of 2021, at the earliest, before a vaccine is widespread and airlines begin to regain their footing, and it will be at least 2022 before travel demand returns to pre-pandemic levels.

The industry probably has enough capital to survive that long, but any step forward would be a welcome development. It makes sense for investors to cheer good news on the medical front, but given the continued risks and uncertainty it is best to focus on the top stocks in the industry and be careful about getting too excited about any one development.

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.