Delta Air Lines Inc., the No. 3 U.S. airline, said on Friday it expects to report a fourth-quarter loss of $500 million excluding unusual items as effects from the Sept. 11 attacks continue to drag on earnings. 

Like most other U.S. airlines, Delta has been losing large amounts of money since Sept. 11 as passengers fly in fewer numbers than normal and often pay cheaper fares when they do. 

The airline will record both gains and charges in the fourth quarter. Charges relate to layoffs, impairment of aircraft, closing of facilities and discontinuing certain capital projects. 

Delta also said it will record unusual gains totaling $370 million, after tax, in the quarter, mostly from cash from the federal government airline bailout and the sale of its equity position in SkyWest Airlines. 

In a filing with the Securities and Exchange Commission, Delta said while amounts of charges to be taken at the end of the quarter are not yet final, it expects they will range between $550 million and $700 million. The airline is sending a letter to analysts and investors dated Friday. 

The magnitude of the charges is slightly greater than the roughly $450 million that Delta outlined in November, also in an SEC filing. About 11,000 Delta employees elected to participate in a voluntary workforce reduction. 

Capacity for the fourth quarter is expected to be down 12 percent from the year-ago period. For the first quarter of 2002, it is seen down 11 percent to 13 percent. 

At year-end, the airline said it expects to have cash and/or near-term liquidity of more than $2.5 billion. 

According to Thomson Financial/First Call, which tracks estimates, analysts expect Delta to post a fourth-quarter loss of $3.64 per share, with estimates ranging from a loss of $2.70 to a loss of $4.25. 

Delta shares are down 23 percent since the Sept. 11 attacks. Since Jan. 1 they have outperformed the American Stock Exchange airline index by 16 percent. 

In afternoon trading, the stock was up $1.01, or 3.6 percent, to $28.87 in an overall rising sector. 

Shares of major airlines were higher on Friday after UBS Warburg analyst Sam Buttrick said he thought most U.S. airline stocks could rise 80 percent to 200 percent over the next two years. Delta was his No. 5 pick.