What happened

The number of COVID-19 cases is on the rise and a fresh round of government assistance from Washington is a nonstarter for now. That's causing a dreary day on Wall Street on Wednesday, with airline stocks performing worse than most.

Shares of Hawaiian Holdings (NASDAQ:HA) are leading the decline, down more than 8% as of 12 p.m. EDT, with Allegiant Travel (NASDAQ:ALGT) off by 7.6% and shares of Southwest Airlines (NYSE:LUV), Delta Air Lines (NYSE:DAL), Alaska Air Group (NYSE:ALK), United Airlines Holdings (NASDAQ:UAL), JetBlue Airways (NASDAQ:JBLU), and Spirit Airlines (NYSE:SAVE) all off more than 4% apiece.

The relative winner on the day is American Airlines Group (NASDAQ:AAL), off just 2% as of noon.

So what

For airline investors, the fall is beginning to look distressingly like last spring. That's when the COVID-19 pandemic first hit and sent demand for travel into a freefall.

We've seen slow, incremental gains in the months since, but travel is unlikely to return to pre-pandemic levels until mid-decade in even the best-case scenarios. The worry right now is that with COVID-19 hospitalizations on the rise in more than half of U.S. states, coupled with new lockdowns in Europe, we could be headed for the dreaded second wave of the pandemic.

A plane lands on the runway.

Image source: Getty Images.

A return to spring conditions would likely only prolong the misery for airlines. The entire U.S. industry has ample cash and liquidity to ride out a crisis into 2021, but the airlines are going to have to see at least some progress toward bookings returning to not run out of money eventually.

Airline investors up until this week had been hopeful that Congress would provide additional assistance to the industry as part of a second stimulus bill. But the talk of a new round of stimulus never turned into actual legislation, and with lawmakers now cleared out of Washington ahead of the election any new assistance is weeks away at best.

Hawaiian, due to its niche network, is particularly vulnerable, and its stock is off more than most after it reported third-quarter results Tuesday night. Allegiant and Spirit, due to their low cost structures, were seen as potential winners if the nascent recovery gained steam.

American, meanwhile, has lagged other airline stocks in recent months on concerns about its industry-high debt levels. As some of these other airlines give back their gains, American is remaining relatively stable.

Now what

Based on what we know right now, I continue to believe every U.S. airline can survive without a bankruptcy filing. Of course, that's tough to say for sure given that we have no way of knowing exactly how the pandemic plays out or when a vaccine will be ready, but the industry has substantial liquidity and can survive months of additional cash bleed.

That said, even if they do survive it will be years before demand recovers. And once it does the airlines will have to work to repair their bruised balance sheets before looking to expand, meaning investors who climb aboard now are in for a long wait.

If you want to buy an airline stock, I'd advise sticking to Southwest or Delta as the two best operators in the business with the best chance of outlasting the crisis. There are also other -- and to me more intriguing -- ways to invest in a potential airline recovery. Either way I'd advise fastening your seatbelt: Wednesday's stock movement is a fresh reminder that there continues to be a lot of turbulence ahead for this industry.