What happened

November has been a great month for airline stocks, with carriers easily outpacing strong S&P 500 gains on excitement surrounding the development of a COVID-19 vaccine. But on Monday investors seem to be questioning whether stocks have run too far too fast, and airlines are under pressure as a result.

Shares of American Airlines Group (NASDAQ:AAL) led the decline on Monday, down 7% at one point, with shares of Spirit Airlines (NYSE:SAVE) off by as much as 6.5% and JetBlue Airways (NASDAQ:JBLU) down by as much as 5.7%.

A plane landing at night.

Image source: Getty Images.

So what

Airlines have been hit hard by the pandemic, but November has marked an inflection point as investors finally have a glimpse of a light at the end of the tunnel. Positive developments toward a COVID-19 vaccine have provided a potential end point to the crisis, and raised confidence that airlines currently bleeding through millions daily will have enough capital to ride out the storm.

Shares of American and Spirit are still down more than 40% for the year, and JetBlue shares are off by 20%, but the stocks have rallied in November based on the growing optimism. American is the major airline seen as most vulnerable to an extended downturn due to its industry-high debt load, while Spirit was seen as a potential early winner in a recovery thanks to its below-average costs.

AAL Chart

Airline data by YCharts

American shares are also likely under pressure after being downgraded to underperform from market perform by Raymond James analyst Savanthi Syth. The analyst said that while American has made progress addressing the holes in its network and cutting costs, it's going to need years to pay down the debt taken on during the pandemic.

JetBlue, meanwhile, provided a reminder that even if a vaccine is near, it will do nothing to stem near-term losses. The airline in a regulatory filing said it expects fourth-quarter flying to be down 45% to 50% year over year, with fourth-quarter revenue off by 70%.

JetBlue had previously forecast fourth-quarter revenue would be down 65%. The airline said booking trends remain "volatile," and said it expects to burn between $6 million and $8 million per day in the current quarter.

Now what

As I've said before the airlines do appear to be in the early stages of a recovery, but investors should not lose sight on just how long a recovery will take. The airlines don't expect traffic to return to pre-pandemic levels for years, and some have warned it could take a decade for more lucrative business travel to recover.

We're in a dangerous period, because even as optimism is justifiably building there is enough danger out ahead that we are likely to see continued turbulence. We're seeing that today, and will quite likely see continued volatility well into 2021.

For investors willing to brave buying in today, it is best to be selective about what airline stocks you buy. We should hopefully be able to avoid revisiting the early pandemic bottoms these stocks endured back in the spring, but still face a long, arduous journey ahead.

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.