What happened

Airlines, as expected, enjoyed a holiday season surge in travel. But the traffic levels were still well off historical highs, and the industry continues to struggle. That is putting airline stocks under pressure on the first day of 2021 trading, with shares of Spirit Airlines (NYSE:SAVE), Delta Air Lines (NYSE:DAL), and American Airlines Group (NASDAQ:AAL) leading the downward push.

So what

The airline industry and its investors will be glad to see 2020 in the books. The pandemic led to a dramatic falloff in travel demand and caused revenue to plummet.

The Transportation Security Administration screened about 324 million passengers in 2020, down dramatically from the 824 million passengers screened in 2019. And while the passenger counts have trended upward in recent months and should continue to do so as the COVID-19 vaccines are distributed, the industry is not expecting to see a recovery to prepandemic travel volumes for years.

A plane landing at night

Image source: Getty Images.

During the recently completed holiday season, more than 1 million passengers traveled daily on most days, some of the highest single-day totals since the pandemic began. But that is still well off of the 2 million to 2.5 million daily travelers recorded a year prior.

Investors on Monday are taking a glass-half-empty look at the holiday travel figures. American is the most indebted of the U.S. airlines and can least afford a prolonged downturn, while Delta has taken a risky approach in blocking middle seats -- and in doing so, limiting revenue -- even as most of its rivals have resumed filling their cabins.

Spirit is expected to be one of the first airlines to recover, thanks to its industry-low cost structure and its focus on the leisure travelers that are expected to return ahead of business tickets. All the airline stocks have been bid up in recent months on anticipation of a recovery, and investors could be taking gains today as the holiday rally fades.

Now what

The good news for airline investors heading into 2021 is we now know what to expect from the industry. The bad news is we won't see a recovery anytime soon.

The airlines should have the financial wherewithal to survive, but it will be years before they are positioned to thrive. Even if traffic does return ahead of expectations, the carriers have taken on billions in new debt that will have to be repaid before focusing on expansion.

For those with patience and the stomach to handle turbulence, it is safe to buy into the airlines. Just buckle up and be prepared for 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.