Fuel prices cause losses for Delta, Northwest

ATLANTA (AP) — Delta and Northwest, seeking to combine to create the world’s largest airline, posted losses Wednesday totaling $10.5 billion as a result of exorbitant fuel prices and write-downs of their companies’ value.

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.