What happened

The latest headlines concerning the pandemic are largely negative, and airline stocks are under pressure as a result. Shares of United Airlines Holdings (UAL -0.16%) led the decline, down as much as 5% on Friday.

So what

Airline stocks were hit hard during the pandemic, as travel restrictions and lockdowns largely eliminated demand for travel. We've seen a gradual recovery in the sector as the global economy has pushed to reopen, but the airlines are still by and large losing money and in a fragile state.

A United jet taxing to the runway.

Image source: United Airlines.

Given the tenuous nature of the recovery, investors have been skittish during periods when the news flow about the pandemic turns negative. That's the case on Friday, with the markets processing news that Austria will impose a full national lockdown starting Monday in response to rising COVID-19 cases. Germany is also planning new restrictions, and in the U.S. there is an uptick in hospitalizations.

The latest headlines threaten the narrative that as the vaccine becomes more widespread, the pandemic will move to the background. That would be bad news for airline stocks, and the sector is trading off as a response.

Now what

The concern is hardly limited to United, but given United's historical place as one of the airlines most reliant on international fares it is understandable that investors are particularly concerned about it in light of the latest news. When times are good, United's international reach is the envy of the industry, but in times like this when new border restrictions are possible United is arguably poorly positioned to succeed.

It is too soon to say what will become of this latest COVID-19 wave, or how bad it will get, but there isn't much evidence right now to support a bull case built around a quick turnaround. For those willing to ride out the turbulence I'd favor Delta Air Lines, which has a better mix of domestic and international exposure, a solid balance sheet, and fewer labor concerns than other airlines.