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Delta warns of new loss

Bankruptcy filing possible, airline says

ATLANTA -- Delta Air Lines Inc. shares plunged yesterday after it warned it will post another substantial loss this year despite a recent round of pay cuts and other cost reductions. It also said a bankruptcy filing remains a possibility.

The disclosure in a regulatory filing fueled talk that the nation's third-largest carrier may need to sell one or more of its feeder carriers.

Delta shares tumbled 56 cents, or 11.5 percent, to close at $4.33 on the New York Stock Exchange. That's the largest percentage drop since its shares fell nearly 19 percent on Oct. 15, 2004, when Delta was previously on the verge of bankruptcy. The stock has traded in a 52-week range of $2.75 to $9.17.

In its filing, Delta said that its cash reserves would be much lower at the end of 2005 than last year unless it can sell assets or raise money in other ways. Its ability to borrow more money, however, is limited because it has already pledged most of its assets as collateral on previous loans.

While the company did not specifically say it plans to sell subsidiaries Comair Inc. and Atlantic Southeast Airlines, which handle flight connections for Delta, the warnings in the Securities and Exchange Commission filing suggest it may have to -- and quickly, analysts say.

''I think it is clearly one of the last options left for them in terms of raising cash," said Bill Warlick, an airline analyst with Fitch Ratings in Chicago.

Earlier this week, speculation over Delta shedding the feeder carriers increased when the chief financial officer of SkyWest Inc. told an investor conference in Florida that his company was discussing with Delta the possibility of it selling Comair and ASA.

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