Bankruptcy for Delta?

Delta Air Lines Inc., the No. 3 U.S. carrier, may file for bankruptcy within weeks, possibly the end of this month, even if pilots accept $1 billion in concessions, analysts said Thursday. The company's shares had their biggest decline in five months.

Delta said in September it would cut as many as 7,000 jobs, drop most flights from Dallas-Fort Worth and add planes to its low-cost unit, Song, to shave $5 billion in annual costs by 2006. The airline, which also has announced plans to beef up its hub at Salt Lake City International Airport, said Sept. 28 that it would cut pay 10 percent for most employees and reduce health benefits.

Delta employs approximately 4,000 people in Utah, including about 700 pilots.

Atlanta-based Delta and other major U.S. carriers are trying to reduce operating costs to stem losses and compete with low-fare airlines. The growth of low-cost rivals that are holding down fares and record fuel prices are eroding profits.

"We think there remains a high probability of the carrier filing for Chapter 11 by October's end," Daniel McKenzie, a Smith Barney analyst, said in a report to investors.

James Higgins, a Credit Suisse First Boston analyst, said Wednesday that Delta may file for bankruptcy in coming weeks. Delta declined to comment "about speculation or rumors," said spokeswoman Peggy Estes.

Delta shares fell 40 cents, or 10 percent, to close at $3.45 on the New York Stock Exchange, the biggest decline since May 10, when the airline said it might seek bankruptcy protection. The shares had gained 5.8 percent in the nine days since announcing cuts in pay and health benefits.

In negotiating concessions, Delta's pilots probably will insist on protecting their pensions in a bankruptcy, McKenzie said. Delta management will face pressure to end the plan if UAL Corp.'s United Airlines, in bankruptcy court for almost two years, wins permission to terminate its plans. United said in August it might terminate and replace its pensions.

If "Delta management reserves the right to terminate the pilots' pension in Chapter 11, we think the pilots will be unwilling to cut a deal," said McKenzie, who has a "sell" rating on Delta. "Before giving management the right to cut their pensions in Chapter 11, we believe they will first demand that management extract greater pain from other stakeholders" including bondholders, lessors and vendors.

Pilots may resume negotiations on issues, including wages and benefits, as early as today, union spokeswoman Karen Miller said in an e-mail.

Delta's employee stock plan has filed to sell more than 8 percent of the company's common stock. Charles Schwab Corp.'s U.S. Trust Co. unit, hired by Delta in July, plans to sell 10.8 million shares, according to an Oct. 4 filing with the Securities and Exchange Commission.