What happened

Airline shares got a lift on Wednesday thanks to positive updates from both Southwest Airlines (NYSE:LUV) and Delta Air Lines (NYSE:DAL) suggesting business is holding up better than expected, and capital markets are still open for airlines looking to raise cash.

Shares of Southwest, United Airlines Holdings (NASDAQ:UAL), and American Airlines Group (NASDAQ:AAL) all traded up more than 5.5% as of 2:45 EDT, and Delta was up 4.4%, on a strong day for the entire airline sector.

So what

Airlines have been devastated by the COVID-19 pandemic, which has caused revenue to plunge and pushed the industry into the red. It will likely be late 2021 at the earliest before we see a recovery, and the question for investors for now is whether the companies will be able to survive until a rebound happens.

Southwest provided an encouraging update Wednesday in a regulatory filing, saying it now expects cash burn to slow to $17 million per day in the current quarter. Southwest had previously guided for about $20 million in daily cash burn.

A plane rises through the clouds.

Image source: Getty Images.

Southwest said leisure demand trends improved in August, and so far those trends have continued into September. That's important for the industry, as there has been some fear that with summer vacation season ending, the uptick in travel would disappear. Southwest also said it is capping the number of passengers on its flights through November in an effort to boost traveler confidence.

Delta is also demonstrating the industry's resilience. The airline is reportedly increasing the size of its planned debt sale from $6.5 billion to $9 billion after receiving strong demand for the new notes. At that size, the offering, which is backed by Delta's Skymiles frequent flyer program, would be the largest debt deal in aviation history.

United is also likely getting a lift from news that leaders at its pilot union had voted to approve a deal with the company that would allow it to avoid pilot furloughs. American has yet to reach a similar deal and could be forced to cut upwards of 40,000 jobs in the months to come, but that carrier and its employees on Wednesday did launch a fresh plea for more government assistance for the industry.

Now what

These are all positive data points, but investors need to be cautious about buying in indiscriminately. The outlook for a slow and choppy recovery has not changed, and no airline is likely to see its stock soar higher for the foreseeable future.

It's worth noting that Southwest and Delta are two of the best-run airlines in the business, with the best chances for survival no matter what comes next. Southwest's views on demand, and Delta's popularity with debt investors, likely are positives for the entire industry, but it would be dangerous to assume debt buyers would be quite as warm to offerings from other airlines.

For now, it's wise to stick to those top performers and keep airlines to a small portion of a well-diversified portfolio. The sector's turbulence is far from over, unfortunately.

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.