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Last Updated: Tuesday, 9 August 2005, 16:02 GMT 17:02 UK
Delta dives on bankruptcy fears
Delta Air Lines planes
Spiralling fuel costs and rising competition have rattled Delta
Shares in Delta Air Lines have taken another hit after an analyst advised clients to sell the stock on fears that the US airline will soon go bankrupt.

Delta's shares fell 10% in early US trade on Tuesday as Wall Street investors took the advice of Merrill Lynch analyst Michael Linenberg.

Mr Linenberg lowered the Atlanta-based airline's rating from neutral to sell.

The carrier has lost nearly $10bn (5.62bn) since 2001 and rising oil prices are now stretching it further.

Funding crisis

Delta has been in talks with creditors about extra funding, but fears are now growing that the latest surge in crude prices could put lenders off trying to prop up the airline.

We think the recent surge in fuel prices greatly increases the likelihood of a bankruptcy filing within the next two months
Michael Linenberg, analyst

The airline's fuel bill is expected to grow by more than $1bn this year, which would wipe out the $1bn in wage cuts offered by Delta's pilots last year.

"We think the recent surge in fuel prices greatly increases the likelihood of a bankruptcy filing within the next two months," Mr Lindenberg said.

The company's current shake-up plan, which includes $5bn-worth of cost cuts, will not be enough to save the airline, its chief executive Gerald Grinstein has warned.

JP Morgan analyst Jamie Baker also warned that without a significant cash injection as soon as possible Delta's bankruptcy filing was "all but assured".


SEE ALSO:
Delta memo fans bankruptcy fears
27 Jul 05 |  Business
Delta cuts fares in survival plan
05 Jan 05 |  Business
Delta pilots vote for pay cuts
12 Nov 04 |  Business
Delta 'reaches $1bn costs deal'
28 Oct 04 |  Business
Delta losses soar in fresh crisis
20 Oct 04 |  Business
Fresh doubts over Delta Air Lines
16 Sep 04 |  Business


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