It took a lot longer than many had expected, but Southwest Airlines (NYSE: LUV) in December finally reached a deal with the union representing its pilots. Investors cheered the development, sending shares of Southwest up 12.9% for the month, according to data provided by S&P Global Market Intelligence.

It has been a turbulent few years for the airline industry. The pandemic all but destroyed demand for travel, but in the quarters since the vaccines were released, airlines have enjoyed strong demand and domestic pricing power.

But beneath the surface, the industry remained vulnerable. Airlines offered buyouts to workers during the pandemic to try to reduce costs and were left severely understaffed as demand returned. Heading into 2023, investors faced uncertainty about costs as inflation and oil prices took their toll and labor contracts came up for renegotiation at a time when demand for pilots was outstripping supply.

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Source Fool.com