What happened

On Friday, airline stocks finished one of their most volatile weeks since the beginning of the pandemic on a high note, with industry shares gaining elevation on a strong day for the broader markets. The industry right now is caught between short-term concerns and long-term hope, and that's causing a lot of turbulence in the markets.

Spirit Airlines (NYSE:SAVE) led the pack, up 8.9% for the day, with Hawaiian Holdings (NASDAQ:HA) up 8.7%, Delta Air Lines (NYSE:DAL) up 6.1%, and United Airlines Holdings (NASDAQ:UAL), Alaska Air Group (NYSE:ALK), and JetBlue Airways (NASDAQ:JBLU) all up more than 5%. Southwest Airlines (NYSE:LUV) and American Airlines Group (NASDAQ:AAL) were both up more than 4%.

So what

Airline stocks were among the big winners following Pfizer's Monday announcement that it is making progress toward a coronavirus vaccine. The industry has been among the hardest hit by the pandemic, and a vaccine is a key to making any sort of a bull case for the airlines.

But that enthusiasm was tested as the week went on. Airlines fell big on Wednesday and again on Thursday as the number of new cases spiked higher, and states and large cities began talking about reinstating lockdowns. Southwest did little to help matters, warning that the modest pick-up in demand it had seen in the summer has decelerated.

An airplane soaring above the clouds.

Image source: Getty Images.

Friday was once again a risk-on day for the markets, fueled by an announcement from the White House that there would be an update on the vaccine development. Friday, like Monday, saw investors favor stocks that have underperformed during the pandemic but should recover once it is in the rearview mirror. That includes airline stocks.

Some on Wall Street are trying to pick winners and losers among the airlines in a recovery. Exane BNP Paribas initiated coverage on the sector on Friday, with Delta and Southwest starting with outperform ratings, American at neutral, and United and JetBlue as underperform.

Now what

Away from the daily ups and downs, it was a good week for the airlines. The stocks are all up between 34% and 6.5% for the week, easily outpacing the S&P 500's 2.16% gain. As important, as said above, the vaccine developments provide at least a glimmer of hope.

HA Chart

Airlines data by YCharts.

The good news is that the entire industry still has plenty of cash to counter losses, so if there are no setbacks in vaccine development, publicly traded U.S. airlines should be able to survive the crisis without any failures. The bad news is that even with the vaccine progress, it will still likely be midyear 2021 before people start flying again, at the earliest. And we could need until 2024 before travel demand returns to pre-pandemic levels.

For those interested in buying in and waiting out a recovery, I think BNP Paribas is largely correct in its recommendations. Delta and Southwest are the top operators in the industry, and should be able to survive whatever comes their way in the years to come. Even assuming some of these other carriers survive, it's much harder to see how the likes of American or United can regain altitude ahead of the pack.

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.