More planes will be grounded

"We face the greatest financial crisis in Delta's history, which is deepened by the impact of military action in Iraq," said chairman and chief executive Leo Mullin.

"Delta continues to successfully reduce costs, preserve liquidity, and implement the strategic elements of our long-term plan for survival."

He added the third largest airline in the US had $2.5bn (�1.6bn) in cash and other reserves which would keep it flying.

Delta reported a net loss of $466m for the quarter, compared with a $397m loss a year ago, $125m of which it blamed on the war.

The Sars illness in Asia and the US economic doldrums have further added to the airline industry's problems.

Earlier this week Continental reported a loss of $221m in the quarter and Northwest a $396m loss.

American Airlines on Wednesday staved off bankruptcy and its shares have since risen by more than 20%.

Flying fat cat

The Atlanta-based Delta lost $1.3bn last year.

Delta paid Mr Mullin a salary of $795,000 and a bonus of $1.4m in 2002, up from $596,250 and no bonus in 2001.

Mr Mullins has said he will take a pay cut and no performance bonus this year.

More job losses are expected despite the carrier laying off 16,000 employees, or 18% of its work force, since the 11 September attacks.

Delta said it was giving 200 pilots leave this year because of a drop in passengers numbers following the war in Iraq.

Capacity will be reduced by a further 10% and 12 planes mothballed.