Delta Air Lines Inc. (DAL), which narrowly avoided bankruptcy last year, Thursday said it expects to post a "substantial" net loss in 2005 and will struggle to meet its cash needs amid low margins and high fuel prices.

"We believe that we will record a substantial net loss in 2005 and that our cash flows from operations will not be sufficient to meet all of our liquidity needs for that period," the No. 3 U.S. airline said in a filing with the Securities and Exchange Commission (search).

Shares of Delta, which on Wednesday said it would remove pillows from domestic flights to cut costs and raise prices for alcoholic beverages, were down 11.3 percent in premarket trading on the Inet electronic brokerage system.

Delta, which posted a $2.2 billion loss in the fourth quarter alone, said it expected to meet its liquidity needs from cash flows from operations, available cash, aircraft financing and funding from a loan deal with American Express .

"Overall, this is pretty much in line with what they've been saying," said Susan Donofrio, an analyst at Fulcrum Global Partners who has a "buy" recommendation on Delta shares.

Delta could raise some $1 billion by selling its regional airline subsidiaries, she said.

"That will help them weather the revenue storm in the coming months and maintain sufficient liquidity," she said.

The Atlanta-based carrier is one of several U.S. airlines that have faced liquidity woes. Two of Delta's six-largest rivals, United Airlines (search) and US Airways (search), are already operating under Chapter 11 bankruptcy protection from creditors.

Despite its problems, Delta in January launched an aggressive plan to cut prices for first class seats and tickets bought at the last minute.

Rival Continental Airlines Inc. (CAL) warned on Wednesday that matching Delta's price cuts would depress its annual revenues by $200 million.