Trading at $45.35 as of May 7, 2001

Mom, through dozens of flights a year, you have found a way to live through your fear of flying. This year, I have something even scarier for you to ponder: the fear of flying companies. As you may know, the six major national airlines all reported a loss for the first quarter. The notable exception? Just ask Selena why she's flying high on Southwest(NYSE: LUV) this year.  

Southwest aside, the runway is strewn with wreckage. It's easy to see why. Jet fuel prices are soaring. Streamlined regional carriers are eating the national heavies for lunch. Supply is outstripping demand. In short, looking for an airline stock to bet against is like shooting a Samsonite bag in a cramped luggage compartment -- it's hard to miss. Still, the meatiest target with the heaviest baggage right now has to be DeltaAir Lines(NYSE: DAL). Mom, you may not normally short stocks -- a process that involves borrowing a company's shares and immediately selling them, with the hope of subsequently buying them back at a lower price and pocketing the difference -- but if you ever do, consider this company.

As the country's third-largest airline, the dynamics of the new economics of air travel are already stacked against Delta. It's competing against the low-overhead regional players like Southwest, that are turning a profit by filling up smaller planes with underserved short-haul routes. I don't want to turn this into a LUV-fest for Southwest, but what it has mastered is something only fit for the nimble.

So for Delta to stay in the air, it has to control costs and be responsive to the shift toward smaller, profitable flights. It's a no-brainer. Unfortunately, between Delta's fat executive ranks and unrealistic pilot union expectations, this "lean, mean, flying machine" just isn't going to happen.

Mom, we both love Dan Marino. He gave us great memories as the all-time leading hurler for our beloved Miami Dolphins. But you had a great comment, when, late in his career, he signed to become the NFL's highest-paid quarterback at the time. The team was excited with Super Bowl wishes, but you had the right perspective. You noted that, in a salary-cap world, the Dolphins had just created a situation where they would be forced to field the cheapest team in the league beyond the quarterback position.

That's exactly what we have in the airline industry. Forget frequent flier programs, the only reason there is any semblance of passenger loyalty is that the airlines are forced to match each other's lowest fares. We live in the information age, so it's hard to rip off the allegiance-free consumer. So when UAL's(NYSE: UAL) United pilots finally claimed the title of the highest-paid fliers, it forced the leading air carrier to be the most prudent in every other facet of operations to keep up with those behind it. Get it? Well, needless to say, since the pact, UAL has failed to report a single quarterly operating profit.

In comes Delta. The Air Lines Pilots Association demanded salaries even higher than UAL's bounty, and Delta conceded. It also agreed to steep step raises over the course of the new contract as well as the difference in back pay for the past year. By all accounts, this will cost Delta at least an extra $2 billion over the next four years of the contract. Is Delta ready?

Ouch. In a way, one might write this off as trade tuition. From Northwest(Nasdaq: NWAC) and its mechanics to AMR(NYSE: AMR) and its flight attendants, the airline industry is ripe with poor relations between management and its unionized ranks.

I don't want to side with either party here. I can't fault the pilots for asking for as much as they can get or the company for yielding as little as it sees fit. But this has hara-kiri written all over it. I can picture Delta's top brass nodding their heads as they strap on golden parachutes. Even worse, the contract binds Delta's hands in growing its fleet of smaller regional Southwest-esque Express planes. 

Analysts keep lowering earning expectations on the company -- perpetually. I'll be shocked if the company delivers these sums once the finality of the new pilot contract begins sinking in and the reality of the peer-pricing pressure that shackles Delta from passing these additional costs to the end user kicks in.

Beyond that, this economy isn't getting any better. Delta's dealing with the slowdown in business-related travel as companies scale back corporate overhead and tourists begin to scale back vacation plans. Since mid-January, Delta has reported a "very substantial" reduction in bookings -- to say nothing of its Comair strike that has now prompted layoffs.

There's a reason why they weigh your luggage at check-in, Mom. It's to make sure the plane isn't overloaded. Well, with Delta's baggage right now, I'd be surprised if it ever gets off the ground.

I love you, Mom!

Rick Aristotle Munarriz hasn't had any negative experiences on the handful of Delta flights he has taken. He plans to fly Delta again. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.

A Stock for Mom represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc. or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts.

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