OK, it's Friday, usually the day we provide rapid-fire short takes on what's going on in airlineland. We'd planned to delve into

World Airways

(WLDA)

, the stock we lovingly call the daytrader's favorite, but a flood of email over the past two days about

AMR's

(AMR)

American Airlines

pushed the column about World to next week. So today we'll give you the skinny on what's going on in our backyard in the Lone Star state.

Just What Is Going On?

It's obvious that I need to do an entire column on the American situation soon. But for now, let's focus on the issue that has come to me via your emails: What the heck is going on?

It's pretty simple: The already poor relationship between American and its pilots continues to deteriorate.

Federal Judge Joe Kendall in Dallas kicked off the latest salvos when he finally ruled this week in the

Reno Air

case between the airline and its pilots' union, the

Allied Pilots Association

. He ruled the APA and its two executive officers were liable for the entire $45.5 million fine that was assessed in the February sickout by the pilots. To add insult to injury, Kendall also ruled that interest on the amount would begin to accrue immediately. That fine is more than the union is worth. Needless to say, the APA is going to appeal.

Meanwhile, as we expected, American said this week that effective Sept. 1 it would officially absorb Reno Air. One little problem: The issues of pay and seniority for the Reno pilots -- which caused the American shutdown in February -- haven't been settled. And there have been no negotiations of late between the company and the union, though talks were scheduled to start again next week.

Then Thursday the

Federal Aviation Administration

and the airline confirmed there would be a four-month FAA safety review of American. The FAA said it would focus on whether American's corporate culture and its "bitter disputes" with the pilots are affecting safety.

And Friday,

USA Today

ran with a story about how pilots at American have been falling asleep due to lack of rest.

Get the picture? The issue of passenger safety, a card that is very dangerous for either side to play, has entered the picture. This is taking on the appearance of a to-the-death struggle, with each side taking turns aiming the artillery at the other.

Folks, we will say this one more time. The labor/management situation at American is deteriorating, not improving. Analysts who pooh-poohed the $225 million loss on the pilot job action as an aberration weren't making an accurate assumption.

And without an enlightened approach from the airline (which we don't see happening), the problem ain't going to get better anytime soon.

Don Carty

, CEO of American, can get up at industry institutional conferences and talk about his attempts to "build a family," but this family is a very dysfunctional one. And institutional investors we talk to are getting impatient with the Carty line.

What about the

argument that despite all this pilot stuff, AMR stock is undervalued because of the inherent value of

Sabre

(TSG) - Get Report

, which in turn owns

Travelocity

? That's fine -- but we still have seen no spinoff of Travelocity by Sabre. Institutional investors we talk to aren't happy about that, either.

The European Alliance Two-Step

For those of you who are following the latest with the continuing European alliance shuffle, here is an update.

Swissair

: Breaking up is hard to do. Not. Swissair, spurned by longtime marketing and codeshare partner

Delta Air Lines

(DAL) - Get Report

earlier this week, promptly let the world know what it thought of its former partner. In something of a surprise move, Swissair announced Wednesday it will sell its 4.6% stake in Delta.

Now we know what Swissair would do with some of the $387 million and change that stake is worth. Apparently some $232 million is going to purchase a 20% stake in

South African Airways

, as the South African government announced today it had awarded the stake to Swissair.

Air France/Delta

: What did we say

last week about

Air France

and those pesky recurring strikes? Guess what? The airline suffered another one today. I have no idea what Delta can do to change that situation, but it strikes me as a perpetual reliability and customer-service issue.

British Midland

: Lots of chatter out there about what is going to happen to regional carrier

British Midland

in this sea of alliance moves. Write our prediction down: We see British Midland joining forces with Air France and Delta in their fledgling alliance.

Options Chatter -- Boeing Puts Heat Up

Our intrepid

TSC

options reporter,

Erin Arvedlund

,

informs us of an above-average level of put and call activity in

Boeing

(BA) - Get Report

. Specifically in the number of people getting out of puts. Now, if you were a tea-leaf reader, this might indicate that these folks now believe the stock is going to go higher and are bailing. Could be. Once again, rumors are swirling in regard to a potential buyout of Boeing by the folks who own the peacock network -- yep,

General Electric

(GE) - Get Report

.

Rumors about a proposed megabillion-dollar deal between the two have fluctuated between hot and heavy and cold and dead for the last five months or so. Whether there is something tangible here that corresponds to the put activity today, we are not certain. But it is clear the rumors are once again flying about a potential GE/Boeing deal.

Holly Hegeman, based in Dallas, pilots the Wing Tips column for TheStreet.com. 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

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

hhegeman@planebusiness.com.

As originally published this story contained an error. Please see

Corrections and Clarifications.