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Airlines are on the path to recovery. Here's what to watch when they report quarterly results

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A Delta Airlines aircraft flies into San Diego International Airport (SAN) in San Diego, California, April 27, 2020.
Bing Guan | Bloomberg | Getty Images

Airlines are still losing money but you wouldn't know it by looking at their stock prices this year.

United Airlines' shares are up nearly 35%, Southwest Airlines' are up about 38%, Delta Air Lines' have gained 22% and American Airlines' have surged 44% on Wednesday morning.

Airline investors have reasons to be optimistic.

Travel demand, at least from U.S. vacationers, is bouncing back after a difficult start to the year when Covid-19 cases peaked. Airline CEOs are upbeat about spring and summer bookings, too as millions receive coronavirus vaccines, quarantine orders are lifted and tourist attractions reopen.

Add to that, in the latest Covid-19 stimulus package Congress set aside a third round of payroll support: $14 billion—in the form of mostly grants that don't have to be paid back—to cover costs of their labor force, which airlines already reduced during the pandemic through buyouts and other incentives.

That brings the total payroll support Congress approved for the sector to $54 billion in exchange for not involuntarily furloughing workers or cutting pay rates.

But airlines have plenty of challenges ahead, even though coronavirus cases have dropped. Revenue is depressed, and international and business travel are still hampered.

Airline executives this month will provide more detailed outlooks about how they're preparing for the spring and summer travel season and what it will take to return to profitability. Delta kicks off reporting on Thursday before the market opens.

Here's what investors should watch.

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