Delta Air Lines (DAL) reported second quarter earnings per share of 55 cents, compared to the First Call estimate of 63 cents, and as expected the current take-no-prisoners stock market treated DAL rudely, sending shares down $1 to $10.73 in mid-day Monday trading.

Even so, for high-risk investors, now may represent a decent time to scoop-up some shares of DAL. Here's why:

Increasing business travel demand, generally tight system-wide capacity for leisure travel in the U.S., and moderating jet fuel prices on lower oil prices, should provide enough of a tailwind to help DAL exceed the $1.55 2010 earnings consensus estimate.

Analyst Upgrades

• Keefe Bruyette upgraded East West Bancorp (EWBC) to outperform from market perform after the company acquired assets from Washington First International Bank. The firm has a $21 price target for shares.
• Piper Jaffray upgraded Amylin (AMLN) to overweight from neutral, citing valuation and Bydureon's profile. The firm maintains a $26 price target for shares.
• Soleil upgraded MGM Mirage (MGM) to hold from sell, citing signs of stabilization in Vegas and valuation. The firm upped its target for shares to $13 from $11.10.
• T. Rowe Price (TROW) was upgraded to outperform from market perform at FBR Capital.
• JetBlue (JBLU) was upgraded to buy from neutral at BofA/Merrill.
• NetEase.com (NTES) was upgraded to buy from hold at Standpoint Research.

Delta Air Lines (DAL) CEO Richard Anderson recently made a cool $1.3 million by selling 100,000 shares of his company's stock at an average price of $13.47 per share. Obviously, this was a nice payday for Anderson, but should this stock sale be a red flag for Delta investors?

Analysts and traders love to watch insider stock transactions because they believe it will give them insight into the health of the company. If insiders are buying stock in their own company, it is viewed as a bullish sign for the company. If insiders are selling stock in their own company, it is often viewed as a bearish sign for the company. After all, who has more information about how well the company is doing than the CEO or some other member of senior management, right?

Unfortunately, it's not that cut and dry.

Early this morning, United Airlines (UAUA) and Continental Airlines (CAL) announced that they will join forces to create the world's largest airline in a $3 billion deal.

The new airline will be bigger than Delta Air Lines (DAL) and will send flights as far as Shanghai and South America. The companies believe that the span of destinations should attract more business travelers and their higher fares. The deal, which will need approval from shareholders and antitrust regulators, is expected to close in the fourth quarter. The new company will be known as United Continental Holdings and will be based in Chicago. The airline's largest hub will be located in Houston.

Another day, another airline fee and this time it's for carry-on luggage! Is there no limit to these fees? Spirit Airlines, out of Fort Lauderdale, Florida, is going to start charging a fee on August 1, 2010. The only group that is not chagrined are probably the nudists that travel light when vacationing.

Given all the fees the airlines are tacking on they might as well evolve into banks. Actually I think this is another instance where business has learned a bad lesson from government agencies. The government may require legislative action to raise taxes but bureaucrats the world over seem to be able to add new fees at will.

It's a bitter pill for U.S. airlines, but it's medicine they have to take.

Beginning next month, airlines can be fined up to $27,500 per passenger if a plane is delayed three hours and passengers can't get off the plane, according to a new federal rule issued by the U.S. Department of Transportation, The Associated Press reported Wednesday.

Airlines may respond by canceling flights, but the goal of the program is to encourage airlines to do a better job of scheduling flights and crews -- and, by extension, a better job of treating passengers.

The silver lining to the travel slump last year was that fewer flights made it easier for airlines to hit their deadlines. In 2009, the airline sector had its best year for on-time arrivals since 2003, largely because many routes were cut as passenger traffic fell and companies looked for ways to cut costs. According to the Department of Transportation, airlines hit a 79.5% on-time rate last year (which includes flights that were within 15 minutes of their arrival time).

Hawaiian Airlines had the best record, but it's a small regional, lacking the challenges of the major carriers. Among the big guys, Southwest's (LUV) 83% on-time rate was best, and United's (UAUA) 81% was tops for traditional air carriers. Of course, these airlines and the rest of the sector were helped along by the fact that they pad their schedule, which makes it a hell of a lot easier to show up on time.

Delta Air Lines Inc. (DAL) said Thursday that it was one step closer to completing its merger with Northwest Airlines, which will create the world's largest air line by passenger traffic.

The two carriers received Federal Aviation Administration (FAA) authorization to operate as a single carrier. They can now fully combine flight numbers, schedules and ticketing under the Delta name. The air lines have already integrated many operating procedures, including the use common technical manuals.

The fact that there hasn't been any action in a while doesn't mean there isn't room for more. Richard Anderson, CEO of Delta Airlines (DAL), says that the airline industry could consolidate further -- not exactly a shock in an industry that is known for universal financial suffering. He notes, "If a transaction were to occur, economics should prevail."

The only concern, of course, is whether the Obama administration would sign off on any future deals. Anderson believes, "I think the case can be made ultimately, but it remains to be seen what this administration's take will be."

This constitutes multiple 'rays of light:' United Airlines (UAUA) Tuesday announced that it would acquire 50 new planes. Twenty five are The Boeing Company (BA) 787 Dreamliners and twenty five Airbus A350 XWBs -- widebody planes with a list price of $9 billion, CNNMoney.com reported.

And Wednesday Delta Air Lines Inc. (DAL) and United indicated that business travel is improving and that the worst of the travel demand slump was over, Bloomberg News reported.

For years, it's been evident that smaller airlines have had an operating advantage, particularly when they use less expensive airports. They've been able to post better numbers as a result, and in the current travel slump, they've outperformed the larger carriers. Well, they've also picked up a considerable amount of market share.

According to a report by USA Today, low cost carriers now have 30% of the market in the United States. Price-sensitive consumers are turning to cheaper alternatives, even if it means (for fliers with elite status) giving up the perks they've earned through years of customer loyalty.

Across the country, big jets are disappearing -- nudged shoved aside by the little guys, which are cheaper to operate and don't require as many butts to fill seats.

The number of empty seats falls, and revenue per available seat-mile (RASM) goes up. It's pretty straightforward. But, for crowded flights, this could leave a few people stuck without their preferred routes. The alternative, of course, is an unsustainable status quo, in which a few passengers remain happy ... until the airline folds.

Business travelers still aren't coming back to the good seats, despite airlines' best efforts. FareCompare.com reports that many business class tickets to Europe are going to be 33% to 66% cheaper this fall relative to last year. Companies are being careful with their cash – which means stacking people in coach rather than giving them a little leg room on overseas flights. With back-of-the-plane tickets going for a quarter of the price (or less) than their business class equivalents, this isn't exactly shocking.

On Wednesday, Delta's (NYSE: DAL) cheapest NYC-to-London's cheapest roundtrip coach fare was $716 (for an October 23 departure and October 30 return), according to a report in USA Today. To take the same trip in business class, you were looking at a hefty $4,634. So, even though prices are down year-over-year, it doesn't mean that business travelers are being allowed to enjoy the opportunity.

Late Monday, Delta Air Lines (NYSE: DAL) announced it raised $600 million in cash and refinanced $1.5 billion in debt in order to help strengthen its liquidity position in 2010. DAL now believes its unrestricted cash balance will be $5.6 billion at the end of the quarter, adding that its refinancing has now addressed more than 40% of next year's loan maturities. The airliner stated that its refinancing has now addressed more than 40% of next year's loan maturities.

Strengthening liquidity is a smart move as it can help the airline conquer some of its technical hurdles. DAL is enjoying a bit of a rally thus far in the calendar year (after starting 2009 with a sharp drop), but I am a bit concerned about its current battle with the $10 level. This round-number level has acted as resistance during the past two weeks, and it could continue in this role. The shares could overcome this resistance with some help from its 10-week and 10-day moving averages.

United Airlines (NASDAQ: UAUA), US Airways (NYSE: LCC) and American Airlines (NYSE: AMR), according to an influential analyst, have run out of options. Jamie Baker of JPMorgan said in a July 20, 2009 report that these companies couldn't do anything to prevent a cash crisis. They only savior available to them would have to be an outside investor. To call the position grim would be optimistic. Unfortunately, it couldn't have come at a worse time.

As Baker was walking the bear into the airline industry, United was starting to celebrate its change in direction. The carrier has improved its on-time rate, according to a USA Today report, and its operations are coming around. Despite the fact that the airline industry has been brutalized by the global recession, the airline has made some progress. Through August, the company's share price doubled, and its ascent has continued in September. So, the company is locked in an ongoing struggle to manage its identity, cope with its past and shape how the world sees it today.

The operational "makeover" has resulted in a reduction of its fleet from 601 jets in 2000 to 386 as of the summer of 2009. In terms of passenger traffic, it's in the #4 spot in the United States – trailing Delta (NYSE: DAL), Southwest (NYSE: LUV) and American. With Q2 revenues off 25.2% year-over-year, however, drastic measures are still necessary.