Delta Impresses at Fun-Filled Merrill Gathering

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You know how I look at analyst conferences? They are always fun to view from a distance as hope springs eternal that a few tasty tidbits will escape from the usual corporate-speak litany of cutting costs, increasing yields and touting alliances. And this week's

Merrill Lynch Transportation Conference

was no exception.

While I personally had to forgo the pleasure this year and literally viewed this conference from a distance, have no fear. Wing Tips has deep-throated sources everywhere.

Best presentation of the conference? According to my sources, the new

Delta Air Lines

(DAL) - Get Report

financial chief, Warren Jensen -- a former denizen of the Peacock network -- took the prize. Delta caught flak, including some from me, when it mortgaged the farm in Georgia to finance Jensen's compensation package. But from what I hear his

Jack Welch

bloodlines sparkled clearly this week, as he presented a very impressive assessment of Delta's previous "good ole boy" mentality and what the carrier would do to rid itself of same in no short order.

This presentation was followed by the announcement yesterday that Delta was bringing on Frederick W. Reid as executive vice president and chief marketing officer of the airline. Reid comes to Delta from his position as president and operating chief at Lufthansa Airlines. You think maybe Delta finally realizes that to play on the world stage, one has to have a world-class ensemble? I think this just might be the case.

I also thought

Don Carty

, president and CEO of

AMR

(AMR)

unit

American Airlines

, made an excellent point when he reminded everyone that he feels American's proposed alliance with

US Airways

(U)

has one big advantage that Wall Street has, for the most part, ignored.

The advantage? (Or would that be -- the

AAdvantage

?) The fact that US Airways and American now share their information technology functions. The airlines share a common technological platform to launch their operations from as a result of

The Sabre Group

(TSG) - Get Report

taking over the IT functions at US Airways late last year. (If you recall, when this happened we

talked about how the deal would make a merger/alliance with the two carriers virtually seamless from the technology side.)

Why does Carty think American will continue to see earnings growth in the next two years? Carty pointed out that year 2000 costs and an unusually high level of heavy maintenance costs will both be out of the mix by the end of 1998. Therefore, he sees 1999 as having potential for good earnings growth at AMR. We still like American.

And what did

Northwest

(NWAC)

have to say about its

labor problems? Nothing. Nada. Northwest Airlines President John Dasburg said he could not comment. At all.

Sources also tell us this week that Mickey Foret, former president of

Atlas Air

(CGO) - Get Report

, is going to return to Northwest as president of the airline, with Dasburg being moved up to a vice chairman position.

Just a thought here. Is it just me, or do you also have the feeling that

Gordon Bethune

,

David Bonderman

and

Greg Brenneman

might be looking at this meltdown at Northwest and getting occasional cold drafts on their toes? And I am not talking beer.

And finally, with US Airways'

MetroJet

now up and flying, US Airways Chairman

Stephen Wolf

told conference attendees at lunch what we have been saying all along. MetroJet -- US Airways' newest low-fare carrier within a carrier -- wasn't created to make money. It was created to "stop the bleeding."

Wolf admitted that US Airways could not stand to just sit by and watch

Southwest

(LUV) - Get Report

and others pick off its profitable routes. He said that rather than lose $200 million a year in Florida, he would be happy just to break even.

Yep. Just as we thought. Shuttle by United, all over again, with just a little different twist.

Innovation, Thy Name Is Money

As we

reported last week,

Chrysler

(C) - Get Report

and

General Motors

(GM) - Get Report

have made good on their proposal to contract out with small start-up carrier

ProAir

rather then depend solely on Northwest Airlines for travel out of Detroit. Fed up with the problems associated with Northwest flights, not to mention hefty walk-up fares, the two auto makers have come up with their own innovative solution.

The agreement the three have apparently struck, according to news stories this morning, appears to mark the first time that corporate entities will basically pay a flat retainer rate to an airline in return for that airline providing unlimited service. The agreement, which is initially for five years, will save the two companies somewhere in the area of $3 million to $6 million a year each.

This is a brilliant idea. And make no mistake about it -- this will now serve as the blueprint for additional agreements of this type.

Oh, and yes, needless to say, this agreement takes potential earnings figures for Northwest, which are already suffering, and stomps all over them.

* * * * *

Winging It

: Don't forget to join me as I chat on Yahoo! at 5 p.m. EDT Tuesday, June 16. To register for Yahoo! Chat, go to

chat.yahoo.com

. See you there!

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