What happened

Shares of Brazilian airline Gol Linhas Aereas Inteligentes (NYSE:GOL) climbed 10% on Monday, propelled both by positive news about a potential COVID-19 vaccine and optimistic commentary from a domestic rival.

So what

Airlines worldwide have had a tough year, weighed down by a pandemic that has crushed travel demand. South American carriers have been hit particularly hard, but Gol so far has been able to avoid bankruptcy.

A plane landing at night.

Image source: Getty Images.

Gol has a cash cushion that will help it to ride out the crisis, but the airline won't be able to start recovering until the pandemic is largely brought under control. Shares of airlines around the globe were rallying Monday after Moderna announced that its vaccine candidate is performing even better than expected in phase 3 clinical trials, raising hopes we are near the beginning of the end of the pandemic.

The airline's shares also likely got a boost from commentary from rival Azul (NYSE:AZUL) about improving travel market conditions in Brazil. Azul lost more money than expected in the recently completed third quarter, but said "domestic demand recovery in Brazil continues to be one of the fastest in the world."

If so, that should benefit all airlines operating in Brazil, including Gol.

Now what

Even with Monday's gains, Gol shares are still down 56% year to date. Given the challenges its entire industry will face in the years to come, a continued discount on the company's valuation is warranted.

The latest news on the vaccine development front offers good reason for optimism, but even assuming that these products are approved rapidly and their rollouts go to plan, availability won't be widespread until mid-2021 at the earliest. The airline industry believes it will take years for demand to return to pre-pandemic levels.

Although Brazil has a large domestic passenger travel market, South American carriers have traditionally relied on international travel for a good share of their profits. And international travel is expected to take longer to rebound than domestic.

There's reason to believe the worst is over for Gol. But the airline's stock is not yet cleared for takeoff.

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