WHEN INITIAL NEWS ABOUT THE efficacy of the BioNtech/Pfizer and Moderna vaccines spread, investors reacted enthusiastically and sent share prices up like hardly ever before. Air Canada stock was up 29% at one point, Lufthansa 26% and Airbus almost 20%. Similar gains could be seen almost across the board. It felt as if the breakthrough the airline industry has been awaiting so long has finally arrived. However, the kind of optimism the share price jumps imply may be premature. In fact, it is still unclear whether many players in the industry have the kind of liquidity reserves and financing in place to survive next year and emerge from the COVID-19 crisis at some point. The crucial factor for airlines based in the Northern Hemisphere will be whether recovery of demand will be substantial in the next summer season. If traffic has not rebounded to way beyond the summer 2020 level, even relatively strong carriers are at risk of failing without a further infusion of billions of state aid.
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