ATLANTA (AP) ¿ A case could be made for further consolidation in the U.S. airline industry, but it's unclear whether the Obama administration would allow it, the CEO of Delta Air Lines Inc. told investors at a conference Tuesday.

CEO Richard Anderson didn't hint whether the world's biggest airline, which bought Northwest Airlines last year, has the appetite for another acquisition. But he suggested there is room for more mergers in the industry.

"If a transaction were to occur, economics should prevail," Anderson said. "I think the case can be made ultimately, but it remains to be seen what this administration's take will be."

He said the current Democratic administration is more focused on regulatory issues than the Republican one that preceded it.

Some analysts have speculated in the past that Alaska Air Group Inc. or JetBlue Airways Corp. could be appealing targets for Delta. There also has been talk in recent years of possible combinations between Continental Airlines Inc. and United Airlines and between American Airlines and US Airways Group Inc.

But no merger deals have materialized since Delta bought Northwest.

In the meantime, Delta, based in Atlanta, is focused on expanding its international prowess through alliances.

It has a joint venture with Air France-KLM and it is trying to lure Japan Airlines away from its alliance with American and into Delta's SkyTeam. Japan Airlines has yet to make a decision on its future course. On Friday, the U.S. and Japan reached a landmark agreement to relax limits on flights between the two countries.

At Tuesday's investor conference, Delta said it expects to increase its cash balance in 2010 despite more than $1.1 billion in pension expenses and funding requirements planned for next year.

The airline said it projects it will end 2010 with $5.4 billion in unrestricted liquidity, up from the $5.3 billion it expects to end this year with.

Just a week ago, Delta said it expected to end 2009 with $5.1 billion in liquidity. President Ed Bastian said the higher projection was due to improving revenue and booking trends.

Delta said capacity will be flat in 2010 compared to this year. Bastian said that if the positive revenue trends were to abate, Delta can pull back capacity.

Delta is targeting $600 million in new cost savings and productivity gains next year. It also plans to make a big investment next year in customer service training across the airline.

Ancillary revenue, which includes bag fees and other add-on charges, has been a key source of revenue for airlines.

The positive projections about next year come after a difficult 2009 for Delta and much of the rest of the U.S. airline industry, which faced weak demand for air travel, especially among business travelers. Bastian described the environment airlines have faced as the "worst economic storm of our lifetime."

"People weren't traveling at any price," Bastian said. "Now, we have the market moving."

The executives were decidedly more upbeat about Delta's prospects for next year than a key trade group was about the overall airline industry. The International Air Transport Association said Tuesday that it expects the world's airlines to lose a combined $5.6 billion next year. That's up from the group's previous projection of a $3.8 billion industry loss in 2010.

IATA said demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs. But fuel costs are rising and yields are "a continuing disaster" because of low ticket prices, the group said.

Delta forecast a $1.5 billion net loss for 2009. Excluding special items, the net loss for this year is expected to be $1.1 billion. Delta's fourth-quarter and fiscal year ends Dec. 31.

Delta shares fell 14 cents to close at $10.95 in Tuesday trading.

Alaska Air Group, operator of Alaska Airlines and Horizon Air, is based in Seattle, while JetBlue is based in New York. Continental is based in Houston. United, a unit of UAL Corp., is based in Chicago and American, a unit of AMR Corp., is based in Fort Worth, Texas. US Airways is based in Tempe, Ariz.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.