What happened

Shares of Hawaiian Holdings (NASDAQ:HA) climbed 10.6% in January, according to data provided by S&P Global Market Intelligence, as investors took a fresh look at the airline following a miserable 2020. The ingredients are in place for a turnaround, but investors should prepare for a long journey up ahead.

So what

Hawaiian, like the rest of the airline industry, was hit hard by the COVID-19 pandemic. The shares lost more than 75% of their value last spring as travel demand plummeted.

Hawaiian was hit particularly hard due to its niche network. Its home state imposed a 14-day quarantine on visitors at the height of the pandemic, a move that discouraged visits to the islands.

A Hawaiian jet flies over Honolulu.

Image source: Hawaiian Airlines.

The industry, and the stocks, slowly recovered throughout the year as conditions began to stabilize and as progress was made toward a vaccine, but the stocks are still off considerably for the year.

The new year is often a time to reassess, and Hawaiian early in the month was the topic of a number of write-ups suggesting it has a bright future once the pandemic clears. With international travel demand likely to lag a domestic recovery, Hawaii could be the destination for a lot of vacationers next summer, assuming the vaccine rollout goes to plan.

Hawaiian also did its part during the month to make sure it has the cash it needs to weather the crisis. The company launched an upsized $1.2 billion notes offering backed by its intellectual property and loyalty program.

Now what

Late in January, Hawaiian lreleased fourth-quarter results that were predictably dreary. The airline lost $3.50 per share on revenue of $149 million, with sales down 79% year over year but nearly double the prior quarter.

The focus is how long it will take for a recovery to take hold. Investors should be cautious. Demand for Hawaiian vacations might indeed return by midyear, but with international and business traffic stymied, a lot of other airlines are building capacity to the islands in hopes of capturing what demand does exist. Hawaiian in years past has leaned on flights between Honolulu and Asia to offset domestic competition, but that is not likely to be an option this year.

Hawaiian is a survivor, but the airline is unlikely to be among the first to recover. Until it does, there is likely a limit on how high the stock can soar.

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.