The first airline to release first-quarter earnings could be the worst.

Delta Air Lines ( DAL) Wednesday releases results before the start of trading, leading the parade of airline earnings to come over the next two weeks. Some of Delta's comments, especially with regard to fuel costs, ticket prices and low-cost competition, will be a harbinger of things to come at other carriers. But the carrier's company-specific issues -- namely deep losses, its falling credit rating and difficult contract negotiations with pilots -- will take center stage.

Wall Street expects the company to lose $2.95 a share in the first quarter, a number that has been on the rise since March 15, when Delta first warned that it would lose $400 million, worse than an earlier forecast of a $300 million to $350 million loss. At the time of the warning, analysts expected Delta to lose $2.51 a share, and in the month since, investors have punished the stock, dropping it 8.1%.

As a result, much of the bad news is priced in and few analysts expect Delta's results to surprise. With CEO Gerald Grinstein negotiating pay cuts with pilots and working on a plan to overhaul Delta's business, due sometime in June, investors will be more interested in Delta's future than its quarterly results.

Fear of Chapter 11

Concerns that the company may have to file for bankruptcy are on the rise.

Pilots, represented by the Air Line Pilots Association, don't have to renegotiate their contract until 2005, but if they don't act soon, Delta could face a cash crunch. The carrier continues to post losses and has $3 billion in debt coming due over the next three years. Last week, Fitch Ratings downgraded Delta's debt rating to "CCC+" from "B" citing "growing concerns over the carrier's ability to reduce pilot costs quickly enough to avoid an intensification of liquidity pressures in 2005."

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