What happened

Congressional lawmakers are preparing to leave Washington, and any hopes of a second stimulus package prior to the election are exiting with them. Meanwhile, the stats on new COVID-19 cases continue to rise.

That's weighing on airline stocks on a gloomy day for broader markets. Shares of Spirit Airlines (NYSE:SAVE) are leading the sector down, off by 7.8% as of 11:30 a.m. EDT; while shares of United Airlines Holdings (NASDAQ:UAL), Alaska Air Group (NYSE:ALK), American Airlines Holdings (NASDAQ:AAL), and Delta Air Lines (NYSE:DAL) are all down 5% or more.

JetBlue Airways (NASDAQ:JBLU) and Hawaiian Holdings (NASDAQ:HA) were holding on slightly better, down just 4% apiece, and Southwest Airlines (NYSE:LUV) was off 3.4% as investors mull an extended period of headwinds for the industry.

So what

Few industries have been hit harder by the COVID-19 pandemic than the airlines. Travel demand has cratered in 2020 and is expected to take years to fully recover. The airlines have survived so far thanks to taking on billions in new debt in addition to government support, but given the pessimistic recovery forecast, the carriers need to be much smaller than they were heading into 2020.

A plane taking off as seen through the window of an airport seating area

Image source: Getty Images.

Airlines have announced tens of thousands of layoffs, but the industry had been hoping to be spared job cuts by a second round of stimulus. The CARES Act provided funds to support payrolls in return for a prohibition on layoffs through Sept. 30, and lawmakers had proposed a six-month extension as part of a broader second stimulus package, but it now appears no aid will be forthcoming prior to the election.

Airline shares are also under pressure following back-to-back days of record numbers of new virus cases in the United States. The long-feared second wave of COVID-19 appears to be at hand in both the U.S. and Europe, raising concerns about whether the fledgling early stages of a recovery can be sustained.

An airline recovery can't begin until COVID-19 is in the rearview mirror. With a vaccine still months away and case numbers growing by the day, there isn't much reason to believe the companies, or the stocks, will soar higher anytime soon.

Now what

Airline stocks for months now have traded up and down based on daily updates on the number of new cases and the outlook for further government assistance. That's led to a lot of turbulence, but the stocks haven't really moved that far.

Expect that to continue. We've seen enough out of the industry to know there are no immediate bankruptcy concerns, but even the top carriers are going to need years before they are able to regain altitude.

For those interested in investing in an aviation recovery, there are related nonairline stocks that I think are a better bet. Among the airlines, stick to top operators like Southwest and Delta and be prepared for a long journey ahead.

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.