We know. You've been preoccupied with a case of Dow 10,000 temporary insanity of late and were therefore somewhat distracted. Well, forget that nonsense, and let's get up to date on the rumblings in the airline sector.

The biggest recent news, of course, was the

announcement that

AMR

(AMR)

, parent of

American Airlines

, made after Wednesday's close about its first-quarter earnings. In a nutshell, the airline lost a LOT of high-yield traffic, much more than the airline had first estimated.

Original analyst estimates for this quarter had projected AMR coming in at around 70 cents a share. After the pilots' work slowdown in February, preliminary information from AMR as to the severity of the revenue falloff had spurred most analysts to cut expectations, with

First Call

consensus estimates for the Fort Worth-based airline then sitting around 65 cents a share.

Not to be.

The airline said late Wednesday that earnings will be about half what they had originally anticipated for the quarter -- in the 30- to 35-cent range. Total cost of the pilot work stoppage is now estimated by the airline at roughly $225 million.

However, the boys in Fort Worth are no dummies. They know what makes Wall Street types happy. Coupled with the announcement of the worse-than-expected results, the airline also announced a stepped-up share-buyback program. The AMR board has authorized an additional $500 million buyback of its common stock, bringing the cumulative total of AMR's repurchase programs since 1997 to $2.6 billion.

In addition, the company announced it anticipates that the $500 million repurchase program initiated in October 1998 will be completed by the end of the first quarter 1999. This represents an accelerated timetable and also totals roughly the amount of income the company will take in from the sell-off of three

AMR Services

divisions and their investment in

Equant

.

So, given all this news, how do we like the stock now as it trades at around 61 and change? Mixed tea-leaf readings on this one. Obviously, if you look at the price of the stock, throw in the stock buybacks, the 80% ownership of

SABRE

and see that at 61 -- we are looking at a P/E of roughly 8 and change -- the stock looks like a definite long-term buy.

However, two tea leaves are caught in our teeth. One, most analysts are talking as if any further pilot-related job actions are not a possibility. We disagree. And even if we do not see a formal sickout on the horizon, the relations between the pilots' union and management are so strained right now that pilots could, at the very least, begin to "slow" the airline down if they chose to do so. A lot will depend on what happens in Judge Kendall's courtroom in Dallas in April, when the judge is expected to rule on just how much money the pilots' union will have to pony up in damages in regard to the sickout.

And secondly, let's not forget that American had one of the weakest fourth quarters of all the majors. While a substantial amount of this quarter's falloff for is related to pilot flu, we will also be trying to pull out the sniffle-related numbers from what is happening in both its international flights in general and its Latin American flights in particular in terms of yield and revenue per available seat mile.

In the long, long term, 61 seems like a deal. Shorter term? AMR is facing difficulties on several fronts. We don't think the airline is necessarily out of the weeds over the

Reno Air

situation, and we expect further pilot union-related slowdowns may be possible. There's also the issue of AMR's investment in

Canadian Airlines

(CA:Toronto), which we talked about

last week. Finally, we think Latin America is a real problem and will continue to be one.

This Quarter's Results Overall

Monday, airline stocks surged as

UAL's

(UAL) - Get Report

United Airlines

announced it would do substantially better than what current analyst estimates had it pegged for. Take this news and put it in the "so what?" category, especially after AMR's announcement yesterday. Most of the major airlines made hay over American's misfortune in February, although it appears that United got the lion's share of bucks.

Traffic indicators still seem to be fairly flat, there is no discernable uptick in RASM to be seen, and capacity will be way up for March. Translation? United's announcement did NOT signal a major uptick in industry revenue trends.

Oil: Will They or Won't They? Does it Matter?

And finally, the sector has been experiencing a great deal of volatility lately that can clearly be tied to one thing: the continuing discussions over the

fact that

OPEC

may finally get its act together and get both OPEC and non-OPEC countries to turn down the valve on oil production worldwide.

We need to remember two things. One, if the price of oil stays at around $15 a barrel, which is what most analysts are now predicting (assuming that OPEC succeeds in getting the oil-producing countries to cooperate to some degree in this reduction), this will not severely impact airline earnings for this year. Why? Most airlines we have talked to have either entered into long-term purchase agreements at a set price or have hedges in place.

So, we don't see the oil bogeyman as anything to lose sleep over -- yet.

However, if you are wondering which airline has the oldest fleet, the answer is

Northwest Airlines

(NWAC)

. Yes, older airplanes drink more fuel. At an average age of 20 years, Northwest's fleet is the granddaddy of the sector.

TWA's

(TWA)

fleet, while improved, comes in second at an average 16.2 years of age.

Here is a summary of the latest average age of the 10 major airline fleets, as of 12/31/98.

Holly Hegeman, based in Dallas, pilots the Wing Tips and Traveling With Wings columns for TheStreet.com. At time of publication, Hegeman held no positions in stocks discussed in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. You can usually find Hegeman, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site at

www.planebusiness.com. While she cannot provide investment advice or recommendations, she welcomes your feedback at

hhegeman@planebusiness.com.