What happened

Airline stocks were in the red on Tuesday after some disappointing news about the Johnson & Johnson COVID-19 vaccine. The update shouldn't be enough to stall the much-anticipated reopening this summer, but it was enough to quell investor enthusiasm for at least one day.

Shares of Delta Air Lines (NYSE:DAL) and Spirit Airlines (NYSE:SAVE) traded down as much as 5% apiece. American Airlines Group (NASDAQ:AAL), which had some company-specific news, was down about the same amount.

So what

Airline investors endured a miserable 2020 due to the pandemic, but the news has been much more upbeat so far in 2021. Fueled by hope that as a critical mass of Americans get vaccinated there will be pent-up demand for air travel, the stocks have soared higher in 2021.

A ground worker directing an airplane to its gate.

Image source: Getty Images.

But on Tuesday the U.S. government recommended pausing deployment of one of the vaccines, the one made by Johnson & Johnson, due to concerns about potential blood clots. The pause is expected to be short-lived, and many jurisdictions have ample amounts of other vaccines to fill the void, but the news if nothing else served as a reminder that we still face challenges in our fight to beat the pandemic.

The J&J news alone should not be enough to stop an uptick in demand this summer. But it appears to have been enough to move some investors to the sidelines.

Now what

This is a tricky moment for airline investors. It seems unlikely the pandemic will be able to do any additional long-term damage to the companies, but the pace of a recovery is far from clear. And the stocks have arguably come back faster than business conditions can justify.

I see nothing in the news that would suggest a need to sell airline shares, but at these valuations, and coupled with the fact it could take years for business and international travel to fully recover, I'm not enthusiastic about buying in right now either. For long-term holders, the best advice is to fasten your seatbelt and try to ride out the turbulence.

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.