What a mixed bag of tricks the airlines are serving up this quarter in terms of earnings results.

Unlike most quarters, when the majority of the major carriers tend to report results that fall into a fairly predictable pattern, this quarter we actually have some very wide-ranging and rather challenging results to crunch through.

Case in point:

Delta Air Lines

(DAL) - Get Report

. The airline reported better than expected results Tuesday, earning $1.33 per share -- compared with the consensus figure of $1.10. However, if you strip out the "miscellaneous" income, the airline was basically flat for the quarter, year over year. In fact, the results for the quarter were a bit disappointing, as we had been anticipating better performance as a result of Delta's fuel-hedging program.

Granted, given the current climate, these results are acceptable. But, again, we felt going into the quarter the airline had an advantage. But that advantage did not materialize in the numbers, as operating expenses were up 14.5% year over year, while operating revenue increased only 13%.

So what was this miscellaneous income that helped Delta beat the Street? Frequent flyer mileage sales, which are still being accounted for on a more aggressive cash basis at Delta. We anticipate the airline will revert to the more conservative method of accounting for such sales with the start of their next fiscal year. In addition, a nice chunk of revenue came in from the airline's stake in

Worldspan

, a computer reservations company that is owned by a number of airlines and widely expected to be spun off in an IPO.

Bottom line: Delta CFO Ed West sounded very bullish on second quarter trends in the company's conference call, which is good, and we anticipate second-quarter results for Delta to be reasonably good.

A Touch of Turbulence for TWA

Delta isn't the only carrier where a stake in Worldspan is creating a stir. The reservation company's probable IPO has some industry wags suggesting that, at under $2 a share, Worldspan co-owner

TWA

(TWA)

should be grabbed by someone or something. Mind you, the thought behind this has nothing to do with TWA's valuation -- just its chunk of Worldspan.

Speaking of TWA, the airline announced earnings Wednesday morning revealing that it made less than we anticipated, but it also trimmed costs more than we had expected. TWA lost $63.3 million, which was more than analysts' expectations of roughly $50 million, and our own estimate of $55 million.

We had been hearing rumors of some very low yield figures for the carrier. On first blush, it would appear the airline's 0.9% increase in yield for the quarter was fairly respectable.

But there are other important things to take into account this quarter.

All things being equal -- yield and revenue per

available seat mile (RASM) should be higher across the board for all the airlines because of the fuel surcharges the airlines imposed during the quarter.

When that little tidbit is factored in, then the yield and RASM figures (RASM was down 2.2% year over year) posted by TWA are not that impressive. In addition, capacity for the airline continues to outstrip demand. (Translation: there are still lots of empty seats.)

TWA was also hit hard last quarter because it had no fuel hedging in place. Average cost per gallon for fuel paid during the quarter was 87 cents. Compare that to Delta, which was hedged and paid 59 cents.

Southwest Cleared for Steady Flight

As readers will recall,

Southwest Airlines

(LUV) - Get Report

went into this fuelish quarter un-hedged as well. Southwest paid 82 cents per gallon for fuel -- nearly what TWA paid.

The similarities between the airlines stop there.

Southwest posted very strong earnings on Tuesday, as the airline bested analyst consensus expectations by 2 pennies at 18 cents per share. More importantly, the airline is on track to post double-digit EPS growth for fiscal year 2000. CFO Gary Kelly said in the company conference call Tuesday that bookings for the second quarter are looking "very, very strong." Just a note. This is from a company that is usually fairly conservative when it comes to talking about future bookings and financial outlook.

Southwest continues to post the best operating margins in the industry. Susan Donofrio, analyst at

Deutsche Banc Alex.Brown

, said in her research note this morning that she estimates the airline will post an operating margin of 16.3% for the year. (Mind you, this is against the industry average of 7.7%). Donofrio has a strong buy recommendation on the stock, with a 12-month target price of $28.

And what about those pesky fuel costs? The airline now has the bulk of its fuel requirements hedged at between $23 per barrel and $27 per barrel for the remainder of the year.

Even with the recent 25% appreciation in the price of Southwest stock, we think the fundamentals are just too good. Even at $19 and change, we like it. We don't see it as a screaming buy -- which it was at $15 and change. But for those of a longer-term mind, the underlying fundamentals and continued growth here are just too good to pass up.

Holly Hegeman, based in Barrington, Rhode Island, 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.