What happened

Positive news concerning a potential COVID-19 vaccine continues to flow in, and with it optimism is growing concerning the airlines. Spirit Airlines (NYSE:SAVE) gained as much as 7% in Wednesday midday trading, with shares of United Airlines Holdings (NASDAQ:UAL) and American Airlines Group (NASDAQ:AAL) up more than 5% apiece and shares of Delta Air Lines (NYSE:DAL) up 4.5%.

So what

After more than six months in crisis mode, airlines and their investors are beginning to think seriously about the beginning of the end of the pandemic. The industry has seen losses mount as travel demand plummeted due to the virus, but with at least two vaccine candidates showing promise, it is possible conditions could begin to normalize by mid-2021.

Pfizer on Wednesday said its vaccine appears to be 95% effective, near the efficacy rate reported by Moderna for its candidate, and Pfizer said it intends to move soon to win approval to begin distribution.

A plane flying over the clouds

Image source: Getty Images.

Spirit is viewed as a likely early winner in a recovery, because it is focused on leisure travel, which should return first, and because it has low costs that should allow it to use fare cutting to stimulate demand. The airline is also making progress restoring its operations, including international flights to Caribbean destinations.

American and United are also likely getting a lift because, after 20 months, Boeing's troubled 737 MAX has been cleared to fly again. American and United won't get the planes integrated into their schedules until early 2021, at the earliest, but the fuel efficiency of the 737 MAX should help cut costs through the downturn.

The airlines are also exploring new ways to manage through the pandemic. American announced Wednesday it was working with its European partner to provide COVID-19 testing to allow passengers to avoid international quarantines. And Delta said it would continue to limit seating in its main cabin through next spring, a move that will cost it revenue in the near term but the airline hopes will allow it to build customer loyalty over the long haul.

Now what

The odds that U.S. airlines survive the crisis are growing with each new positive vaccine development, but investors need to be careful not to get ahead of themselves. We are still likely years away from passenger levels returning to prepandemic levels, and the airlines will need time to rebuild bruised balance sheets once the worst of the crisis is over.

I believe it is likely certain airlines, like Spirit and Southwest Airlines (NYSE:LUV), are positioned to recover faster than the overall industry. But for those who want to take a long-term approach and invest in an eventual industry recovery, I'd advise sticking to top operators Southwest and Delta, which have the wherewithal to survive whatever new twist comes their way and are maneuvering to be in a strong competitive position when the pandemic is in the past.