Airlines were all but out-of-business during the COVID-19 lockdown. Even before the virus, airline stocks were dirt cheap. While they were declaring fat dividends and buying back shares with both hands, most still had price-to-earnings multiples near 10.

Investors had seen this story before. Most airlines declared bankruptcy at one time or another in the 2000s. In March it seemed they might do so again.

The CARES Act and the Federal Reserve’s actions to increase the money supply changed the equation. Major airlines secured billions in direct aid and billions more in loans that may not be repaid. They then got billions more in loans from a market desperate for yield, and worked hard to cut costs, even skirting the edges of the act in their efforts.

The question for investors is less which airline stocks might survive, but which will come back fastest in a world still dealing with COVID-19?

The conventional wisdom is that short routes are better than long ones, that cash is king, and that cost containment will make everyone a winner when the virus is gone.

But how long will the virus be here? How many people will fly so long as it’s around? How long until the industry gets back to something like normal? How much cash is enough? These are the questions the market is now trying to answer.

The answers, tentative though they may be, are reflected in the prices of the following airline stocks. But those answers are also subject to change without notice.

American Airlines (AAL): The Dash for Cash

American Airlines (NYSE:AAL) is a case study in how this is playing out for airline stocks. The stock bottomed in March below $10 per share. By June 24 it was still trading at around $13.50.

That’s a market cap of $5.65 billion for an airline that had $45 billion in revenue during 2019, and still booked $8.5 billion for the quarter ending in March. The company is next due to report earnings July 30, with $1.43 billion of revenue expected. Things might have been worse except for cargo flights, on which American has an extensive schedule.

American had $3.7 billion in cash at the end of March and has spent the last three months getting more. In April, the airline announced $5.7 billion in direct aid under the CARES Act, including a $4.1 billion cash grant and $1.7 billion in loans. It said then it would ask for another $4.75 billion loan from the Treasury. American raised $3.5 billion more from the capital markets in June. That’s a total of nearly $14 billion in new cash.

American was burning $100 million of that cash per day in April, but by June had cut that to $40 million per day. Under the CARES Act, American promised to refrain from layoffs and furloughs through September. It has already used attrition to cut 30% of office jobs and 20% of its fleet. More people will be laid off without severance in September, but are being told their fate in July. Meanwhile, the company is offering buyout packages to experienced workers.

How much is their stock being watered down by this fundraising? The latest loans include options for up to $225 million in shares, about 4% of the current float of 423 million. The CARES Act warrants cover 13.7 million shares at $12.51 each, a dilution of 3%. More important may be the new $750 million share offering, 13.2% of current shares. Total dilution of current shareholders looks to be about 20%.

Before the pandemic, American already had nearly $29 billion in debt and its bonds were rated near junk. The new financing adds about $10 billion to that and the latest carries a yield of 12%. In addition to standard covenants, some of the notes are being secured with slots, gates, and routes at airports in the U.S. and Latin America. The airline’s 5% bonds due in July of 2022 currently trade at 70 cents.

The bottom line is that while American’s future is mortgaged, it does have a future. If traffic returns to 80% of its normal level in 2021, American has the operating costs to make money, even with the dilution and new debt.

You don’t have to rush into airline stocks like American, but by December it may be an attractive post-pandemic speculation.

Delta Air Lines (DAL): The Conservative Approach

Before the pandemic, Delta Air Lines (NYSE:DAL) was the strongest carrier of airline stocks. Despite this it was still selling at under 10 times earnings.

Today no one talks about earnings, only cash burn, cash level, and debt. In that environment, today’s strength may mean less of a rise tomorrow. Delta traded June 24 at $28, 50% off its pre-pandemic high. But that is still a market cap of $17.8 billion, on what in normal years would be $47 billion of revenue.

Delta has been raising cash and reducing its cash burn during the current quarter. It started with $6 billion of cash at the end of March. It took a $3.6 billion grant and a $1.8 billion loan under the CARES Act. It sold the government warrants representing 1% of its common stock while promising no involuntary furloughs through September. Delta quickly drew down a $2.6 billion lending facility, then went to the market for $3 billion more at an interest rate of 7%.

Like other airlines, Delta has cut its schedule and mothballed planes. But it’s playing the pandemic conservatively. It knows it may already be in violation of loan covenants signed in better days. So far, investors are giving it credit for acting in this way. The stock’s price hasn’t been hit as hard as American’s. Many analysts are already nibbling on it.

This means that even if Delta returns to profit in early 2021, as it now anticipates, its stock price may not rise as far or as fast as other airline stocks. It doesn’t have as far to go to return to cruising altitude.

JetBlue (JBLU): Get Small Fast

Next up on this list of airline stocks is JetBlue Airways (NASDAQ:JBLU). JetBlue is a fraction of the size of its larger rivals. The problem is it’s not a regional airline, as past small airlines were. It’s a budget airline, with cross-country routes and heavy traffic from New York to Florida.

Its solution to the crisis is to get small fast.

JetBlue lost two-thirds of its value when the lockdowns hit in March and has only regained one-fourth of that ground, trading June 24 at $10.50 per share. That’s a market cap of $2.8 billion, for a company that had $8 billion in revenue in 2019. For the June quarter revenue is expected to be just $167 million, when it reports Aug. 6.

JetBlue had under $500 million in cash at the end of March. It took close to $1 billion in CARES Act support, including a $250 million loan. That will keep 23,000 on the payroll through September. The company also borrowed $1 billion secured by aircraft and parts in June, with 341 planes still unencumbered.

But that’s not enough. The company was burning $18 million of cash per day in March, cut to $10 million/day in May. When the CARES Act money runs out in October layoffs will follow. JetBlue will contract out some functions to save more money. The route map is also being “consolidated” with a focus on Boston and Ft. Lauderdale, where it has hubs.

But will even this be enough? Even a $10 million/day cash burn comes to over $1 billion when carried from June through September.

Going into the crisis, JetBlue’s credit rating was on a par with that of Delta, but now it’s BB+. If a second wave of infection causes another lockdown in the fall and JetBlue can’t return to profitability next year, it could be in real trouble.

For now, JetBlue is a stock for gamblers and optimists. It’s not nearly as cheap as it looks.

Southwest (LUV): Best of the Bunch?

Investors see Southwest Airlines (NYSE:LUV) as the best card in the deck of airlines stocks.

The stock was worth $58/share before the pandemic, but you can get it June 24 for almost half-off, at $32.50. That means it still has a market cap of over $19 billion, against 2019 revenue of $22 billion.

The optimism is based partly on the balance sheet. Southwest had more cash than long-term debt at the end of March. It’s also based on a route structure that emphasizes short flights. The hope is people will return to those flights more quickly than cross-country or international flights. Southwest is expecting revenues of $540 million for the June quarter, having already begun to ramp up flights early in June.

Southwest took $2.3 billion in direct aid and a $1 billion loan under the CARES Act, in exchange for warrants worth less than .5% of the common stock float. The company also took a $3.7 billion private loan in April. It said in mid-May it had $13 billion in cash on the balance sheet.

In June Southwest said it was burning just $20 million in cash each day and said it had enough money to sustain that for two years. To speed revenue, the airline has even launched a fare war with flights as low as $39 one-way.

If Southwest is right, it should sail through the pandemic since vaccines are expected in about one year. The problem is the optimism is already in the stock price, down just 39% on the year. If you are a pessimist concerning the virus and still want some upside, Southwest is the airline stock for you. You just may not be the big winner when all this is over.

Spirit Airlines (SAVE): Can It Be Saved?

Spirit Airlines (NASDAQ:SAVE), a constant source of humor on nightly comedy shows, has SAVE as its stock symbol. Can it be saved?

The stock was down over 60% on the year by June 25, trading at about $17. That’s a $1.5 billion market cap on a company with 2019 revenues of almost $3.9 billion.

Spirit is known for serving airports larger carriers shun, like Ft. Myers, FL, Charleston, WV, and Atlantic City, NJ. Many prime destinations like Ft. Lauderdale, FL (where it’s based), Detroit, and Minneapolis are also under-served.

As the stock symbol implies, it’s also known for low prices. It’s also known for its no-frills treatment of passengers, charging extra in every way it can.

Spirit went into the pandemic with less than $900 million in cash at the end of March, against $3.2 billion in long-term debt. In May it offered 17.5 million new shares, a 20% dilution to existing shareholders, at $10/share. It also priced $175 million in convertible notes, at an interest rate of 4.75%. In June, CEO Ted Christie was talking about “winning the recovery” with a quick return to service in July from hubs like Boston.

Unlike the major carriers, Spirit got minimal help from the CARES Act, just $330 million. Former CEO Ben Baldanza called the act an “industry takeover.” To get any aid, Spirit had to fly empty planes to two dozen cities. It did this by running small planes on triangle routes to a hub.

Before the virus, the company was planning to buy 100 new planes, build a new headquarters in Dania Beach, FL, and dramatically expand service to Latin America.

Optimists think Spirit can get its daily cash burn down to $4 million/day by fall, even less by renegotiating salaries and contracts.  If that burn stays low and traffic returns this fall, Spirit is in position to fly high.

If the pandemic returns with a vengeance in the fall, as some bearish analysts suggest, Spirit may still crash.

United Airlines (UAL): Uncle Sam Says Live, Darn You!

Last up on this list of airline stocks is United Airlines (NYSE:UAL). Back in 2017, when Warren Buffett of Berkshire Hathaway (NYSE:BRK.A) was buying airline stocks like they were Coca-Cola (NYSE:KO), I called United “the worst airline you can buy.”

At the time United was trading at about $70 per share, double its price on June 25. The market cap is down to $9.67 billion on 2019 revenue of $43 billion.

Then came the CARES Act.

United got a $3.5 billion payroll grant under the law, and a $1.5 billion treasury loan. This was secured with warrants for 4.6 million shares of stock. The airline currently has 290 million shares outstanding. At the end of March, the airline had $5.2 billion of cash, including $2.8 billion in fresh debt.

While the act demanded United keep employees on the payroll through September, it quickly tried to make many part-timers. It was forced to back off that plan, a black eye to the whole industry.

United tried to raise $2.25 billion more cash with a bond issue but failed. This forced it to tap the CARES Act for more loans. It was able to sell $1.1 billion more in stock, further watering down shareholders.

During the second quarter, United was burning through $40 million in cash each day. That means much of its cash will be gone by the time it next reports earnings on July 30. It expects to have $1.14 billion of revenue for the quarter, down 90%.

I’ve repeatedly used the word “bankruptcy” regarding United, but the government seems determined to keep it flying. Under the law, bankruptcy is the ultimate bailout. You can write down debt, renegotiate contracts, and write off stockholders. CEO Scott Kirby says his mission is to “get through hell as quickly as possible.” But it’s stock and bondholders first, throw the employees overboard. In bankruptcy it’s the opposite.

If there’s no second wave in the fall and if United returns to normal service in 2021, it’s a cheap stock right now. But that’s a lot of ifs for a stock whose price has been no more discounted than Delta’s, while constantly flirting with disaster.

If United management is right, you can double your money in a year by buying the stock now, and still have an undervalued investment. If the virus is right, you’ll be burning money like Uncle Sam.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear,  available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.