United Airlines Holdings (NASDAQ:UAL) was among the first to sound the alarm on how bad the COVID-19 pandemic would be for the industry. The airline's third-quarter results were a fresh reminder of how accurate that call was, but what stood out on the post-earnings call that followed was a subtle shift toward optimism and talk that the worst is now over.

United lost $1.8 billion on revenue of $2.49 billion in the quarter as sales fell 78% year over year. The airline bled through about $25 million per day as traffic fell by 83%.

Investors knew going in that the quarter would be a mess. What matters is the outlook, and on that subject United management was surprisingly upbeat.

UAL Chart

United vs. the S&P 500 data by YCharts

"The light at the end of the tunnel is now visible"

On the call with investors, CEO Scott Kirby said the airline was trying to be "realistic and objective" at the beginning of the crisis, which is why United was forecasting layoffs even as the ink on a $50 billion industry assistance package was not yet dry.

The warnings proved accurate, as United and other airlines are now laying off tens of thousands as they try to downsize in response to tepid demand.

"Emotions like pessimism, optimism, hope, fear have no place when you're making decisions that involve the lives of tens of thousands of employees and the future of a great airline," Kirby said on the call. "You have to be objective and realistic."

There's no quick solution to what ails the industry, but that realism now has a touch of optimism sprinkled in. Airlines still have "twelve to fifteen months of pain, sacrifice, and difficulty ahead," Kirby said. But he also said United has done enough to ensure its survival, and is beginning to plan for that eventual recovery.

"The light at the end of the tunnel is now visible," Kirby said. "It's a long tunnel and it will have twists and turns, but we'll begin to move back toward normal with what health experts are telling us is a widely available vaccine around the end of next year."

How United plans to win

United believes business travel, a vital source of revenue for airlines, will not recover to pre-pandemic levels until 2024. Though the rise in popularity of video conferencing services could permanently change the dynamics of business travel, the airline does not expect the need to travel for business to disappear.

"I've been fond of saying the first time someone loses a sale to a competitor who showed up in person is the last time they tried to make a sales call on Zoom," Kirby said.

The changing business landscape due to the pandemic could open new doors as it closes old ones. Any loss of demand from road warriors flying regularly for meetings could be replaced by demand from employees now authorized to work remotely who need to periodically check in at headquarters.

A United Airlines plane leaves the hangar at night.

Image source: United Airlines.

But for now, the recovery will be built around leisure travel. In late August United took a big step to court vacationers, and disrupt the industry, when it permanently eliminated change fees on tickets. It's also refocusing its network by adding flights to leisure destinations in Florida and across the Sun Belt, and putting an emphasis on Hawaii.

Hawaii accounted for about 4% of total domestic flying prior to the pandemic but will grow to about 9% in the fourth quarter. Last month, the airline piloted a COVID-19 testing service for Hawaii travelers that could be rolled out for international and even domestic flying.

Leisure travel tends to be more price-sensitive, and in working to cut expenses, United is trying to make its cost structure more variable so it can be ramped up or brought down, based on demand.

Is it time to buy United?

United ended the quarter with $19.4 billion in available liquidity, enough to ride out an extended crisis and reason enough for the airline to begin to focus on a recovery. But as warned, that recovery is going to take a long time to materialize.

Kirby seemingly took a shot at rivals Delta Air Lines (NYSE:DAL) and American Airlines Group (NASDAQ:AAL) in saying he expects United to be "the first network carrier to return to positive cash flow" in 2021, a sign of his confidence in a recovery.

United's management team deserves strong marks for its handling of this crisis, and its blunt honesty throughout. Since coming up the ranks first at America West and then at US Airways and American before moving to United, Kirby has established himself as one of the industry's premier operators, and United shareholders should be glad he is in the cockpit.

That said, United prior to the crisis was an airline built for international and business travel. The changes it's making now are the right moves, but they will take time to implement and come with risks. United is still a company playing catchup.

I'm a believer that United is moving in the right direction, and after years of having little interest in buying in, I'm warming to the stock enough to put it on my watch list. But a lot could go wrong in the years to come as we await a recovery.

United is going to make it through the crisis, but I still see alternatives like Delta and Southwest Airlines (NYSE:LUV) as safer investments for those with the stomach to buy into what will be a turbulent recovery.