Delta Air Lines may have to file for bankruptcy in the next few months because it is not generating enough money.

The airline announced that it will post a substantial loss for the rest of the year. Last year Delta signed working finance agreements, but they might not be enough to keep the airline where it needs to be. Bloomberg News elaborates:

The airline said in a U.S. regulatory filing today that it’s asking to amend terms that require earnings to exceed a certain level before some costs. Delta got the $630 million in loans from a General Electric Co. unit and American Express Co. last year.

Delta said that if it can’t comply with or rework the terms, the loans may become due immediately, which could force the company into bankruptcy. The Atlanta-based airline lost $1.1 billion in the first quarter as fuel prices rose and competition held down fares. Delta, which forecasts a “substantial” loss for 2005, had said in a March annual filing that it expected to be in compliance with the terms this year.

“Unless they sell at least one of their regional carriers, they will be forced to file for bankruptcy within the next six months,” said Jim Corridore, an analyst with Standard & Poor’s. “And if they did sell a regional carrier, it still wouldn’t change their overall situation. It would just buy them more time out of bankruptcy court.”

Delta shares dropped 9% in early NYSE trading and have fallen 59% so far this year.

Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.