What happened

Shares of Delta Air Lines (NYSE:DAL) got a lift Tuesday following an analyst upgrade and comments from the airline's CEO concerning the health of the business and the need for furloughs. Delta shares traded up more than 5% early on Tuesday before giving some of those gains back as the day went on.

So what

Airlines including Delta have been hit hard by the COVID-19 pandemic, with Delta CEO Ed Bastian saying in a memo to employees Tuesday that the airline is currently flying about 30% of the passengers it flew a year prior and is burning through about $750 million per month.

A Delta plane taking off.

Image source: Delta Air Lines.

Investors are fully aware of how bad things are. The stock is getting a boost on Tuesday because conditions are not worse. Bastian said in the memo that with about 20% of employees accepting voluntary proposals including early retirement packages, the airline will not need to furlough any non-pilot employees this fall as it looks to cut costs and stem cash burn.

Pilots remain at risk for furloughs, though the CEO said the airline and union leaders are in talks to explore alternatives.

Delta shares also likely were up Tuesday on Seaport Global analyst Daniel McKenzie initiating coverage on the airline with a buy rating. McKenzie wrote that he believes the market is underappreciating Delta's ability to recover post-pandemic, saying that its attractive hubs and leading position in top markets put Delta in a strong position.

Now what

I'm bullish on Delta too, believing it to be one of the better buys in the industry. But investors need to be cautious not to get ahead of themselves. Airlines are unlikely to see traffic volumes return to pre-pandemic levels until late 2021 at the earliest, and it is going to be hard for the stocks to fully regain altitude until that happens.

These remain risky stocks, and if Bastian can't navigate the pilot union negotiations successfully there could be lingering resentment even after a recovery happens. For those who can stomach the turbulence Delta is an interesting, though speculative, buy; just be warned it will likely be a long, choppy trip before the airline reaches its destination.