Delta, Northwest lose combined $10.5B on high fuel, charges

Southwest's chief executive, meanwhile, indicated that the carrier wasn't interested in a merger and said the very thought of it was daunting.

The red ink from Delta and Northwest put into focus the enormity of the challenge the airline industry faces to become profitable again amid $120-a-barrel oil even with the benefits that consolidation can bring.

"All airlines are in the same boat," said Calyon Securities analyst Ray Neidl. "The industry cannot make money at the current ticket fare levels. Seats have to come out of the market. To cover higher fuel costs, air fares have to go up."

Atlanta-based Delta Air Lines Inc., the nation's third-largest carrier, said its loss widened in the first quarter to a whopping $6.39 billion. A few hours later, Eagan, Minn.-based Northwest Airlines Corp. reported a $4.1 billion loss for the period.

Delta's results badly missed Wall Street expectations, despite a 12 percent increase in sales.

Excluding special items primarily a $6.1 billion non-cash charge relating to the drop in Delta's market value due to sustained record fuel prices the airline lost $274 million in the first quarter.

Northwest took a $3.9 billion charge of its own related to its market value decline. Its loss came despite a 9 percent increase in sales, and Northwest, too, missed analysts' earnings expectations.

Excluding the accounting charge and losses from some fuel hedges, Northwest said it would have lost $191 million in the quarter.

In a memo to Delta employees Wednesday, Ed Bastian, Delta's president and chief financial officer, said the airline expects some of its peers to record similar accounting adjustments. A spokeswoman said Delta would have recorded the charge regardless of the tie-up with Northwest.