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Thanks to ongoing economic worries and moderating oil prices, the airline industry has managed to fly under the radar for much of 2010. While a major volcanic eruption put flights in focus for a few weeks, the ash eventually cleared, and so did the buzz about the industry. But with earnings season progressing and a wave of M&A activity sweeping over the industry, the world’s biggest airlines could once again find themselves in the spotlight in the near future.

Today, Delta Air Lines (NYSE:DAL) will release their earnings for the third quarter of 2010. Analysts have estimated an EPS of $0.94 for the industry bellwether, along with revenues of $8.82 billion. For the previous two quarters, the actual EPS has matched up with the forecasts provided by analysts, leaving many to hope that Delta will meet their marks yet again. As the world’s largest airline operating under a single operating certificate, the report from Delta should be a great barometer for how the entire industry has performed this past quarter. Aside from Delta, U.S. Airways (LCC) and AMR Corporation (AMR) (owner of American Airlines) will also be reporting later in the day, making today a pivotal one for the legacy carriers.

Delta will be a particularly interesting report to watch, as many are worried that Southwest will slowly chip away at Delta’s dominance. Delta’s main hub is in Atlanta, which was also a main hub for Air Tran, an airline that was recently purchased by Southwest. Now that Southwest has even wider access in the U.S. and especially in the southeast, they may be able to undercut some of the traffic away from Delta, which could lead to another price war if Delta engages in a prolonged campaign to defend its fortress at Hartsfield/Jackson International Airport where it flies more than half of all passengers leaving the area.

As several airline giants are set to report today, the Guggenheim Airline ETF (NYSEARCA:FAA) should be active in trading. The top holdings of this ETF include Southwest (NYSE:LUV) (15.5%), Delta Air Lines (14.9%), and JetBlue Airways (NASDAQ:JBLU) (3.7%). While FAA offers international exposure, nearly three quarters of its assets are focused on domestic firms. This fund has had a strong year, posting gains of approximately 25% since January and a 15.5% gain over the past three months. If Delta hits its marks and gives good guidance for the important holiday season, look for FAA to have a strong trading day, but if the major airliner falls short, FAA could be in for some severe turbulence.

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Disclosure: No positions at time of writing.

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Source: Key Earnings Place Focus on Guggenheim Airline ETF