What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?

Many economists and analysts would agree that, along with other infrastructure and related investments, the nation's air traffic control system must be upgraded, if the United States seeks an air transportation system capable of maintaining a high level of safety -- and better service -- in the 21st century's more-crowded skies.

Further, that the United States has not already replaced an essentially generation-old air traffic control technology with a modern system is a serious demerit, and one that has -- through delays, cancellations, and other problems -- taken a toll on the flying public and the major carriers.

Diversified industrial manufacturer Eaton Corporation (NYSE: ETN) posted some great numbers for 2Q 2008. Investors responded by pushing the stock down 8% as a result. Go figure. With the exception of its automotive segment, which saw a modest 2% decline in sales, all other divisions posted double digit sales increases with demand remaining strong going forward. 2Q sales increased 32%, net income increased 35%, while net income on a per share basis increased 24% The company posted these results despite the fact that oil prices increased 40% during the quarter.

The FAA recently awarded a $40 million contract for power quality equipment. The company's Hydraulic Launch Assist technology performed very well in tests on trash trucks. It reduced fuel costs by 25% and significantly reduced brake service costs. With diesel prices showing no signs of decline, demand for this technology will be very strong when it becomes commercially available in late 2008. CEO Alexander Cutter forecasts FY sales growth to be 3% in the U.S. and 5% internationally. FY operating EPS are forecast to grow 12-16%, resulting in EPS of $7.70-$8.00. At this rate of return, the stock is currently bargain-priced around $73.00

AMR (NYSE: AMR) may have skipped key inspections of some of its planes to keep them in service. According to The Wall Street Journal, "American made the procedural changes and revised its maintenance manual in an effort to prevent planes from being pulled out of service." The inspections were meant to look over planes that may have been hit by lightning.

American's defense for skipping the procedures is that, if a pilot reported that his plane was hit by lightning, mechanics will look into it. What if the pilot is napping? Further, the airline says no plane has crashed from a lightning strike in over 30 years. How convenient.

The airlines have one, weak reason for cutting back on inspections. They cannot afford them. The federal government has to deal with the fact that some carriers are near bankruptcy because of high fuel prices. The FAA may have to supply financial support for extra work by mechanics, or watch the industry fall apart.

Douglas A. McIntyre is an editor at 247wallst.com and the editor of Ten Stocks Under $10.

It's another day of cancellations for American Airlines -- AMR Corp (NYSE: AMR) -- as its current round of plane inspections is moving slower than had been anticipated.

Roughly 900 of the airlines flights have been canceled today, representing around 40% of its usual daily flight volume. The delays started on Tuesday when the American announced that it had to re-run inspections that it held last month after the FAA decided that the work done did not meet its standards.

On Tuesday the airline canceled 460 flights, and then another 1,094 yesterday, so it has been a tough few days for passengers trying to get to their destinations. All in all, over 100,000 passengers have been effected by the current situation at American.

American Airlines -- AMR Corp (NYSE: AMR) -- is once again canceling massive amounts of flights in order to inspect the bundling of wires in some of its airplanes. You may recall, that this is the same situation that led to around 400 cancellations last month, and this current inspection is estimated to affect even more flights, with up to 500 flights being canceled.

The current round of cancellations, which represents about 20% of total American flights, started late Tuesday afternoon, and was expected to last Tuesday night and into Wednesday, and possibly even beyond.

Passengers that were scheduled to fly the canceled American flights have been switched over to alternative American flights, or placed on other airlines that service the selected routes.

For anyone who has plans to fly on American Airlines, AMR Corp (NYSE: AMR) or Delta (NYSE: DAL) today, you may want to call ahead and verify that your flights are still taking off as planned, as both airlines are canceling hundreds of scheduled flights today.

Both carriers are grounding a large number of flights as they continue to hold inspections on wiring bundles on some of their planes. For American, the company is planning to ground 132 of its flights today, while Delta is canceling 275 flights.

The Federal Aviation Administration is in the middle of a massive inspection project, in which it stated that it will be inspecting 10 safety orders (also known as airworthiness directives) at every single major airline by March 28. This comes after a scandal broke out over missed inspections at Southwest Airlines (NYSE: LUV) earlier this year.

Don't forget that new rules regarding air travel with lithium batteries take effect on January 1. Spare lithium batteries -- meaning those not installed in the devices they are intended to support -- may not be packed in checked bags. Spare batteries in carry-on baggage must remain in the original packaging or be placed in plastic bags so that leads are not exposed.

Batteries, whether spare or installed, are also subject to quantity restrictions. Those with up to 8 [grams]-oz. of lithium, or about 100 watt-hours, are allowed. That includes cell phone lithium ion batteries, as well as most laptop batteries. You can also bring additional spare batteries with an aggregate of up to 25 [grams]-oz. of lithium, or 300 watt-hours. However, you may only bring up to 2 [grams]-oz. of lithium metal per battery. Most consumer lithium metal batteries are below that limit, but check with the manufacturer of your devices if you are unsure.

In a nutshell, traveling with most lithium batteries intended for consumer devices should be okay, but those for professional grade equipment may be confiscated.

The fear is that non-rechargeable lithium batteries may pose a fire hazard. The FAA has found that the fire-protection systems in the cargo holds of passenger planes cannot extinguish fires sparked by lithium batteries. And the NTSB has not ruled out that a fire in a cargo plane at Philadelphia International Airport last year was caused by lithium batteries.

[Updated units of measure.]

John F. Kennedy International Airport has long been a historic gateway to the United States, but in today's world, Alan Levin of USA Today called a recent visit "more like a dysfunctional parking lot."

Levin couldn't be closer to the truth. I live in Queens, New York, where not only JFK Airport resides but also LaGuardia International Airport on the northern side of the county. Both airports could be classified as "dysfunctional" during a slow day. Through May this year, about four in ten flights at JFK, LaGuardia and Newark were at least 15 minutes late, according to the federal Bureau of Transportation Statistics. JFK is on pace to handle 460,000 flights this year alone, 33% more than the turn of the century - and that's only seven years ago.

Analysts, shareholders (and would-be shareholders), and many others no doubt will be keeping on eye on Memphis-based FedEx Corp. (NYSE: FDX), the global leader in express transport and delivery, when it reports Q4 2007 earnings next Wednesday, June 20. Many consider FedEx to be a bellwether for the economy.

Since FedEx reported a mild Q3 back in March, the trend of its share price hasn't been especially impressive these past three months. Blame it on the economy, fuel costs, the weather, or stiff competition from rivals United Parcel Service (NYSE: UPS) and DHL, a Deutsche Post (LSE: DPO) company, but FedEx has struggled of late, as reflected perhaps in the BloggingStocks Battle of the Brands match-up: FedEx vs. UPS. Analysts' feelings are mixed on FedEx as well, and the company does still face such troubles as discrimination lawsuits.

But it's no accident that FedEx is within the Fortune 500's top ranks. It continues to expand, both domestically and internationally, and stands to benefit from impending increased air traffic between China and the United States. General Motors (NYSE: GM) recently declared FedEx its 2006 Supplier of the Year, and the FAA has given FedEx a vote of confidence as well. And in May, FedEx announced a 10% boost in its cash dividend, to ten cents per share. The Motley Fool thinks FedEx may be a bargain, as well.

According to Thomson Financial, the brokers' consensus on FedEx is buy (6 buy, 7 strong buy, 7 hold). Its P/E is 15.89 (compared to 11.96 industry average), and its market cap is $33.16 billion. When FedEx reports earnings next week, Wall Street is expecting revenue of $9.14 billion, or earnings per share of $1.89, compared to $1.82 actual last quarter, and $1.35 a year ago. Its price target is $124.42; the 52-week low was $97.79 in August 2006 and the high was $121.42 near the end of this past February. FedEx closed Wednesday at $108.82.

Latest FAA statistics confirm that air travel has reached a new low. In the first third of 2007, over one-quarter of flights within the U.S. were late on arrival, and almost 70,000 flights were canceled. And this despite many airlines padding their arrival times to give them a generous cushion against delays.

Nearly half of the delays were weather-related, including the Denver snowstorm debacle that sent JetBlue's (NASDAQ: JBLU) reputation for customer service plummeting. Even in April, after the weather improved, JetBlue was second only to US Airways in lowest on-time arrivals, at 64.8%. Comair joined the tardy trio with 67.9% on-time arrivals.

US Airways (NYSE: LCC), which I've nicknamed "Air Mañana," operated four of the six most frequently delayed flights in April. These six flights you most want to avoid: