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A Close Encounter of the Herb Kind

Tippers rubs elbows with Herb Kelleher, Southwest Airlines' CEO, and he's looking just fine. Plus, some other tidbits.

Guess who we ran into last Saturday?

Southwest Airlines


Chairman and CEO Herb Kelleher.

Yes, there we were, minding our own business, eating breakfast at a colorful landmark by the name of


, on Harry Hines Blvd. here in Dallas. Now, let me set the stage here for you. Mecca is the kind of institution where you find great food, wise-cracking, gum-popping waitresses who have been there forever (and call all customers darlin' or hun), and everything from Porsches to beat-up pick-up trucks grace the parking lot.

Of course, to get the full effect, you need to know that this Dallas institution is also smack in the middle of a neighborhood that includes porno shops, pawn shops and auto-repair garages.

Who should walk in for breakfast but Herb, dressed in jeans that had once fit a larger girth, and a rather fetching sport shirt.

As many know, Herb is now in the third week of radiation treatments at the

MD Anderson Cancer Center

in Houston, after having been diagnosed in August with prostate cancer. The furor over how he is doing, and whether this news would force Southwest to finally name a successor to Herb, has been fierce of late.

Well, the man looks fine to me. Yes, he has lost some weight, and yes, he seems to have lost a few hairs to the atomic particles his body has been bombarded with, but he is not letting it get him down. And his piercing blue eyes, which he puts about five inches from your face when he is talking to you, are just as clear as ever.

The biggest negative associated with his treatments?

"Holly, you will understand this. I'm bored. I am


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bored," he said, peering intently at me. "I get on a plane in the morning, I have the treatment, I get back on the plane, and then I go back to the office. Every day. The same thing.

"I hate it. Can't go anywhere," Herb said.

"And you know, how come if this radiation stuff is supposed to be so good for you, everyone else leaves the room when they give it to me?"

Same old Herb.

His parting comment? He was glad to hear I'm moving to Rhode Island -- and oh, by the way, did I know that Southwest is the largest carrier out of Providence?

Herb, tell me something I don't already know.

In an interview with

Bloomberg News

earlier this week, Kelleher once again said that his successor will not be named in advance, and that he intends to serve out his contract, which runs until the end of 2000. He also repeated that he would like to stay longer, if the board wants him to.

As if that would even be an issue.

And yes, we would be remiss not to mention that Herb was standing in line for the smoking section. Some things don't change.

Okay, it's Friday. Here are some tidbits of note to carry through the weekend.

First, there's



. We thought this stock might make a run this quarter, but instead it has performed like a dog. Through last Friday, the stock had lost 19% for the quarter. Amtran, which flies under the name of

American Trans Air

, recently lost a $60 million contract with

Renaissance Cruise Lines

. According to the folks we talked to today, Renaissance pulled the contract for nonperformance reasons.

In an interesting aside, the cruise line has awarded the contract to

World Airways


on a probationary basis. World has allocated one MD-11 to handle the contract at this point, but if the airline performs satisfactorily, two more aircraft will be allocated to Renaissance work.

This contract is a nice plum for World, which continues to struggle through a continuing restructuring process.

Another thing we need to talk about today is the cargo carriers, who've been action-packed this week. Big gains have been posted by

Kitty Hawk


, and big drops have been posted by

Atlas Air


this week. Both stocks have been trading at much higher-than-normal volume.

The downward action in Atlas shares was so strong on Thursday that the company issued a news release restating that its block hours -- the amount of time aircraft are in use -- were still on track for the quarter. However, the stock still closed down 6% on Thursday to close at 25 1/16.

What is going on here? We are not sure. It could be any of a number of things.

At Kitty Hawk, on the other hand, we are just tickled to see the upswing, especially after we said in

July that the stock was poised for a potential run after last quarter's earnings. But, when the stock posted a 26% gain on Wednesday, we were a bit surprised.

We had more than one email this week from


subscribers who had decided to jump ship and take some profits.

Some moves involving Kitty Hawk and


, the delivery service subsidiary of



, may have a bearing on what is going on with KTTY stock. Apparently, this situation has some investors wondering if the long-time "close" association between Atlas and Fedex has cooled somewhat.

As many of you know,

FDX Global Logistics

, a subsidiary of FDX, just recently announced the acquisition of

GeoLogistics Air Services

unit for approximately $116 million. The important thing to consider here is that Kitty Hawk is a major subcontractor of GeoLogisics Air Services, which has both investors as well as FedEx pilots -- who are not happy about Kitty Hawk pilots flying cargo for a subsidiary of FDX -- intensly interested in the longer-term effects of the deal.

More to come about this in another installment of Wing Tips.

And finally, a sad note to discuss. Steve Lewins, the often-times off-the-wall airline analyst at


is missing in action. As many readers will recall, Lewins made

headlines three years ago when he sent rambling messages of conspiracy theories and Samurai warriors to members of the press. Gruntal stood by him then, and he came back to continue as their transportation analyst.

However, if you call his office these days, you will be told that he is on an "extended leave of absence."

We liked Steve. Maybe it was partly because he was the only major airline analyst to put a "sell" rating on an airline stock in all the years we have followed the industry.

We wish him well -- wherever he is.

Holly Hegeman, based in Dallas, pilots the Wing Tips column for At time of publication, Hegeman held no positions in any securities mentioned 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 While she cannot provide investment advice or recommendations, she welcomes your feedback at