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ERROR: type should be string, got "https://www.barrons.com/articles/airline-stocks-take-off-amid-early-signs-of-a-recovery-51590508272\nAirline Stocks Take Off Amid Early Signs of a Recovery\nDaren Fonda\nMay 26, 2020 11:51 am ET\nOne measure the TSA didn’t require was vacant middle seats.\nPhotograph by Ethan Miller/Getty Images\nAirline stocks are soaring on a number of positive signals for the industry, including an easing of some travel bans in Europe, improvements in passenger traffic, and new screening rules in the U.S. that could bolster confidence in air travel.\nThe NYSE Arca Airline Index was up 9% amid a rally that saw the S&P 500 gaining about 2% in early trading. Some of the hardest-hit airline stocks were surging, including United Airlines Holdings (ticker: UAL), up 12%, and Spirit Airlines (SAVE), up 14.6%.\nUBS analyst Myles Walton, meanwhile, upgraded his rating on Southwest Airlines (LUV) to Buy from Neutral, and increased his price target to $41 from $37, writing that the airline offers the “best risk/reward” to play a recovery. His price target implies a 28% upside from recent prices around $32.\nPositive news keeps trickling out for the industry. Deutsche Lufthansa (LHA.Germany), the second largest airline in Europe, received a bailout package worth 9 billion euros (about $9.8 billion) from the German government. The deal gives the government a 20% stake in the airline and two supervisory board seats, and it could be positive for U.S. airlines such as United, which has a flight-sharing deal with Lufthsana.\nSome European countries are easing travel restrictions. Italy plans to allow travel between select European countries starting June 3. Germany and Greece plan to reopen their borders on June 15, and Spanish government officials have said the country will reopen to foreign tourists in July, ending requirements for a two-week quarantine period for travelers.\nIn the U.S., the Transportation Security Administration announced new health-safety measures, aiming to increase social distancing and reduce touch points. Starting in June, passengers will be able to hold on to their boarding passes, rather than handing them to attendants. Food must be kept in a clear plastic bag for screening—reducing chances of an inspection. The TSA also said it would try to resolve security alarms by having passengers go through rescreening and handle items themselves. Security personnel must now wear masks and gloves, and the agency said that it would increase social-distancing requirements in security lines.\nOne measure the TSA didn’t require was vacant middle seats. Those seats have become controversial—some airlines are blocking them, others are limiting seat inventory or allowing passengers to rebook their flight if a plane is nearly full. Moreover, the TSA didn’t require temperature screening of passengers, something that some countries are requiring (including Japan, Mexico, and Italy) and that could boost confidence in flying.\nTravelers in the U.S. appear to be gradually getting back on planes. Passenger air traffic last week was down 88% from a year ago, an improvement from the 91% decline a week earlier. The low point came in mid April, when passenger traffic was down 96%.\nAirlines are also reporting slight improvements in their cash-burn rates as revenue picks up. Delta Air Lines (DAL) has said that it expects its cash burn rate to decline from $50 million to $40 million a day by the end of June. United and Southwest have also told investors that they expect their cash burn rates to improve.\nAnalysts sound increasingly upbeat that the industry may have hit an inflection point, though they caution that it’s still a long way from a healthy recovery. Comments by airlines appear to confirm improvements in demand, but they are coming off extremely low levels, wrote Raymond James analyst Savanthi Syth in a note published Monday.\nU.S. airline load factors (the percentage of a plane’s seats with ticketed passengers) are improving, she added, primarily to leisure destinations. But “to be clear, revenue remains challenging,” with airlines like Southwest going from a 90%-95% decline in ticketed passengers to an expected 80%-85% decline in June.\nAirfares are also increasing off lows in March, Syth wrote, albeit they are still lower the levels early in the year, based on a four-week moving average, and airlines have cut capacity sharply, limiting revenue gains.\nSouthwest looks appealing, according to Walton, for its “remarkably clean” balance sheet and largely domestic network—attributes that provide some protection for the airline if there’s another wave of virus infections. Southwest is also in a good negotiating position with Boeing (BA) over Southwest’s orders for 737 MAX planes (which have been grounded for safety reasons), he adds. Those orders were a liability before the crisis, but Southwest may now have more flexibility to reduce capital spending than other airlines.\n“We view LUV [Southwest] as the best way to play a recovery” in U.S. airlines, Walton writes. “We expect the industry recovery profile to stretch to 2023/24 but see LUV on the recovery post ’20 as having the best shot at getting back to pre-crisis earnings and cash flow.”\nWrite to Daren Fonda at daren.fonda@barrons.com\nAirline stocks are soaring on a number of positive signals for the industry, including an easing of some travel bans in Europe, improvements in passenger traffic, and new screening rules in the U."