Airline stocks soared on Nov. 9 after Pfizer announced progress toward the development of a COVID-19 vaccine.
Appearing on Motley Fool Live later that day, Motley Fool contributor Lou Whiteman and "The Wrap" host Jason Hall talked about the factors that caused investors to rush into the shares on the vaccine news, and whether the rally is sustainable.
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Jason Hall: Lou, let's talk a little bit about airlines stocks or just as a category, up huge that I think just about every single publicly traded airline stock in the U.S. gained pretty big today.
Lou Whiteman: Yeah.
Jason Hall: Just tell us, what does this mean, what's changed and most importantly, what hasn't changed.
Lou Whiteman: I know you love visuals Jason, you're a visual person. I did bring a little visual if you want to see, they went like this today, [LAUGHTER] we have our airlines going up.
Jason Hall: I just want to say Lou, that was even better than a screen share.
Lou Whiteman: Yeah. It's AirTran too, so it's actually a non-existent [LAUGHTER] company which is an exit for me. But doing a little shout out to Old school Atlanta. But yes, so airlines today. Hawaiian (HA 1.17%) up 50 percent, a whole bunch of other ones, JetBlue (JBLU 7.17%), Spirit (SAVE -1.59%), Alaska (ALK 5.88%), United (UAL 5.96%) all up about 20 or more. The laggard of the day was Southwest was up just about 10 percent. For a very good reason, as Keith said earlier, there's no way to put this other than this is great news. You can't make a bull case for airlines without a vaccine and it's really hard to make a bull case for airlines without a vaccine coming soon. One data point here from the earnings. United had said more than half of its bookings right now were 30 days for less before departure, which isn't really a surprise right now. I think it's possible we're going to see more advanced planning as this vaccine is rolled out. I think honestly just the news is going to start changing that mindset. That means revenue coming in sooner, that means cash bleed slowing. This is good news for the airlines. That said, we are still in the very early days of a very long recovery period. If all goes well, unless you use Keith's estimate because I think it's a pretty good one, maybe we can hope that there is a widespread vaccine in time for next year's summer vacation season. That's the beginning of the bull case right there. If there is a vaccine, I do believe there's pent-up demand for leisure and we'll see the planes start to fill. But we're talking in if and we're talking at least six months away. Once that comes, a boost of leisure travel will keep the lights on. It's good and revenue is good. But they need international business to come back to really make money, that's going to take years. We're talking 2024 or maybe longer before we see traffic volumes returning to pre-pandemic levels. I'm bullish personally that business travel will come back. I think it might look different, but I think it will come back. It's not going to come back quick. International, who knows when that comes back as countries literally need to take prohibitions off. That could be a slow process as we work through things. I think it's important not to get ahead of ourselves. Looking at it even after today's gains, these stocks were all down between 18 and 50 percent for the year, even after today. That feels about right and I don't know, it was a good day, I see the reason for excitement, but we're still down. We're still in the very beginning of a recovery and so just be careful here.
