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Last August the CEO of Delta Air Lines offered John Selvaggio a new assignment. The job description: Start a low-fare airline to compete with JetBlue and Southwest, the only two carriers that consistently turn a profit. (Delta lost $1.3 billion last year.) Do it with idled Delta jets and company employees who might otherwise be laid off. Start by flying the same routes that the current low-fare division, Delta Express, loses money on, and expand from there. Do it with a launch team of just a dozen people, and don't antagonize anyone, particularly the pilots' union. And, oh, by the way, do it profitably -- fast.

Selvaggio's old job involved helping Delta manage the post - September 11 airport chaos. If anything could be more challenging than that, this was it. Selvaggio, now president of Song, Delta's newly launched startup, accepted on the spot. "I knew it was going to be fun," he says, without a trace of irony. "And I'm not afraid of doing hard work. JetBlue has done very well in the market. We think we can take it up a notch."

Song isn't intended to replace Delta overnight -- if ever. But it will address the one slice of the travel market that could remotely be characterized as high growth: price-conscious leisure travelers. And it will serve as a petri dish for new ideas and processes that could eventually transfer over to the mainline brand, Delta, enhancing employee productivity and asset utilization there. "We're trying to do what Coke did with its Dasani brand for bottled water," says David Pflieger, Song's vice president of operations, safety, and security. (Like Selvaggio, he's a relative newcomer to Delta.) "Dasani went from nowhere to number three in the market. We're not saying Delta's bad, just that we want to do something different."

That's what they're saying at Delta -- and at virtually every other large company. Change from within is the order of the day: How do you use your market clout and resources to battle the agility and originality of new-breed competitors? How do you embrace a new set of strategies and operating procedures? In short, how do you create a new company with the same people?

Song's first flight, on April 15, represented something of an early milestone for Selvaggio and his team as they address those and other thorny questions. For the remainder of the year, amid considerable turbulence in the travel industry, they still have to roll out a total of 36 planes -- in some cases adding more passenger capacity to routes that Delta Express already serves -- and prove that Song can sweeten Delta's bottom line sooner rather than later and help shape Delta's long-term future.

The Checklist: 2,500 Projects in Two Months

It's February, and there are 55 days left before takeoff. Song's Core Team has convened for its weekly meeting. Twenty-two people sit around a conference table at Song headquarters, in a brick building adjacent to Atlanta's Hartsfield Airport. The deck of photocopied PowerPoint slides lands with a thud. It's 34 pages long and deals with about 2,500 projects that must be finished by April 15. Selvaggio keeps the meeting brisk without glossing over anything. Tom Cooper, director at Delta's technical-operations facility, reports on how the IFES, or in-flight entertainment systems, will be integrated into the seat backs. The project won't be rolled out until October. "Let's keep the heat on," Selvaggio says.