What happened

Airline shares soared higher on Monday on another positive development in the race to produce a COVID-19 vaccine, and on data indicating a strong weekend for travel. American Airlines Group (NASDAQ:AAL) led the sector higher, closing up 8.2% for the day.

So what

Airlines have been hard hit by the pandemic, which has caused travel demand to plummet. American and other carriers have raised billions in new liquidity to help weather the crisis, but there can be no recovery until the virus is under control.

For the third straight Monday, airline stocks were higher on positive vaccine news. This time it was a vaccine candidate from AstraZeneca and Oxford University that studies indicate is effective, meaning we now have three promising vaccine candidates to deploy against the virus.

An American Airlines jet leaves the hanger.

Image source: American Airlines.

There was also fresh travel data that indicated Americans are slowly returning to the skies ahead of a vaccine. Over 1 million people per day passed through Transportation Security Administration airport checkpoints on both Friday and Sunday, with Sunday's total of 1,047,934 travelers the highest recorded since March.

The airlines had hoped for an uptick in travel over the Thanksgiving holiday, but with public health officials urging people not to travel for the holidays, it was hard to predict if demand would materialize.

Now what

Thanksgiving and year-end travel is sure to be down from last year, but the airlines will take any help they can get. The entire industry is burning cash right now, and each added ticket sold provides a little more revenue to close the gap.

American Airlines shares are particularly sensitive to changes in demand because that carrier, more than any other, is perceived as being vulnerable to a prolonged downturn. The company has the highest debt levels among U.S. airlines, and burned through $44 million in cash through the third quarter.

American shares are now up 20% for the month, but still down 52% for the year. The near-term jump makes sense, as the current traffic trends and hope for a vaccine in the months to come should mean that American has enough cash to survive. But the recovery will still take years even if the vaccine comes through as hoped, and investors should be cautious about buying into this nascent rally expecting the year-to-date gap to quickly close.