Delta Air Lines Inc. (NYSE: DAL) has selected Richard H. Anderson to replace its retiring CEO, a move that analysts believe will pave the way for potential mergers with other airlines. Deals could happen within the next year, as such ventures may have a harder time getting approval if Republicans lose control of the White House in 2008. Analysts specifically named Northwest Airlines (NYSE: NWA) as a merger candidate with Delta, since the new CEO was formerly in charge at NWA.

After hitting a one year high of $21.95 in April, the stock has been suffering lately, hitting a year low of $14.94 earlier this month. This morning, DAL opened at $18.15. So far today the stock has hit a low of $17.74 and a high of $18.65. As of 10:55, DAL is trading at $18.10, up $0.39 (2.2%). The chart for DAL looks bearish but improving, and S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 8.7% return in just 2 months as long as DAL is above $15 at October expiration. Delta would have to fall by more than 17% before we would start to lose money.

DAL hasn't been below $15 by more than a few cents since it emerged from bankruptcy and has shown support around $15 recently. This trade could be risky if crude oil prices soar again, but even if that happens, this trade could be protected by its support right around $15.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in DAL or NWA.

In another lap tray to the belly, customers of Milwaukee-based Midwest Air Group (NYSE: MEH), repeatedly named as one of the nation's best airlines for customer service and comfort, learned today that the airline will be purchased by a group led by TPG Capital. The investor group includes Midwest's competitor Northwest Airlines (NYSE: NWA), which is reviled by passengers for its cattle-car seating, lack of timeliness and failure to understand the concept of customer service

The acquisition offers little in the way of synergy to the two airlines. They duplicate many routes, and Midwest flies the Boing 717, while Northwest uses 747s and 757s. What the deal does accomplish is to block the expansion of a potential competitor in Northwest's upper midwest routes. While the deal secures the present management of Midwest, I suspect it's just a matter of time before the malaise reaches Milwaukee.

Midwest has been fighting off suitor Airtran Holdings' (NYSE: AAI) hostile takeover attempt, which reached $15.75 and $389 million before it folded its cards late last week. TPG, which grew out of the Continental Airlines (NYSE: CAL) takeover in 1993, is offering $16 per share, or over $400 million, to take the company private. The Midwest board voted Sunday to go forward with the TPG offer, and an agreement is expected by midweek.

Travelers expecting to fly on Northwest Airlines (NYSE: NWA) had another tough couple of days this past weekend. The company has been plagued recently by an insufficient pilot workforce, which forced the airline to cancel hundreds of planned flights over the weekend.

The official line coming out of the company is that flights were forced to be canceled as a result of "significant spikes" in pilot absenteeism, but has been very careful not to come straight out and accuse the pilots of an illegal job action. Northwest emerged from bankruptcy a couple months ago, and during the course of its bankruptcy procedures was able to win concessionary labor contracts. This, obviously, has not gone over too well with its workforce, and could be part of the problem that has led to the "spike in absenteeism."

This train of thought, however, is quickly negated by Monty Montgomery, who is the spokesman for the Air Line Pilots Association branch at Northwest. According to Mr. Montgomery, the problem here has nothing to do with any unhappiness among Northwest pilots, but instead, the blame can be put squarely on Northwest's shoulders. In an official statement regarding this past weekend's cancellations, Mr. Montgomery stated that the problem "is and always has been a staffing problem."

In what might prove to be great news for General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F), the airline industry continues to foul its own nest by treating customers like egg-laying hens, penning them up until they've been squeezed dry, then plucking them clean.

Northworst, I mean, Northwest Airlines Corp. (NYSE: NWA) is the current worst-in-class, as its 'passengers' have been caught in the middle of a labor dispute between pilots and the airline, facing canceled flight after canceled flight. However, Northwest is just one of many culprits in this effort to convince the American public to take a car vacation.

US Airways (NYSE: LCC), aka 'Air Mañana,' was the perpetrator of six of the ten most delayed fights in April. We all remember the JetBlue (NASDAQ: JBLU) debacle this winter, and NPR's Scott Simon has documented his ongoing problems with United Airline's (NASDAQ: UAUA) unresponsive lost luggage department.

Even with airlines padding their flight times to increase on-time arrivals, almost one in every four is delayed. And while the industry continues to use weather as the whipping boy, according to FAA statistics it accounts for less than 1% of delays.

As we enter the vacation season, I would have expected the airline industry to put its best foot forward. Instead, it seems to be dropping its collective drawers to moon us. My advice? Drive. Yes, you'll be cooped up in a small chair, but you can get up to pee any time you wish.

Flight delay info can be found on the FAA website.

AMR Corp (NYSE:AMR), parent of American Airlines, Wednesday reported its first annual profit since 2000, posting Q4 earnings of 7 cents per share. That may not sound like much, but the airlines have weathered a recession/overcapacity-driven slump. Consider: In Q4 2005 AMR lost -$3.46 per share, or $600 million. For 2006, AMR earned 98 cents per share, up from a loss of -$5.18 per share in 2005.

With excess capacity reduced, the U.S. economy growing, and travelers acclimating themselves to the travel safety/security requirements of the new era, legacy carriers like AMR have slowly crawled their way back to profitability. Further, if fuel costs - - which have started to moderate - - remain at tolerable levels, airline earnings should increase again in 2007.

Investment Analysis: AMR, currently trading at around $39, remains a high-risk stock not suitable for conservative- or moderate-risk investors. However, if your portfolio can tolerate a high-risk, cyclical stock, consider adding a half-position of AMR. Buy 50 shares if you typically buy 100 shares; 250 if you buy 500.

This post is written as part of AOL Money & Finance's Best & Worst 2006. To vote for Northwest's blunder or to see other dumbest moments in business, go here.

Back in August, Northwest Airlines went through a bit of trouble and was forced to cut wages and fire workers as it tried to figure out how to get out of bankruptcy. Fifty of these newly unemployed workers were given a booklet that contained 101 money-saving tips to help them through their transition. It included the advice that these former ground workers for the airline not be shy about dumpster diving.

If that's what Northwest Airlines management thought was a good way to help its fired employees, it's hardly surprising that the company stumbled its way into bankruptcy to begin with. It shows a complete lack of connection with the people who are the company's lifeblood.

The booklet, which got quickly yanked from the airline's website, contained other helpful nuggets, such as the need to set aside money for emergencies and the recommendation that employees move somewhere with a lower cost of living.

The airline, when challenged, agreed that it was a "bit insensitive," which had to be one of the understatements of the year. Northwest tried to pass off the blame by saying the booklet had been prepared by an outside company and was not vetted by management.

One big tip for Northwest's management: passing the buck didn't exactly re-inspire confidence in their ability to run the airline.