Cash is once again becoming a critical issue for major airlines in the face of stubbornly high fuel prices, middling revenue and weak balance...

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DALLAS — Cash is once again becoming a critical issue for major airlines in the face of stubbornly high fuel prices, middling revenue and weak balance sheets.

Oil prices tipped $55 a barrel this week — almost 20 percent more than airlines had expected — pushing jet-fuel prices to $1.40 a gallon, compared with less than $1 a year ago.

Yesterday, Delta Air Lines said it will report a loss even though it has chopped workers’ pay and streamlined operations in recent months. It also said filing for bankruptcy protection is still a possibility.

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Airline-industry observers have begun watching cash balances for signs of erosion that might cause the biggest carriers to violate loan terms or face a liquidity crisis.

“At this stage in the economic cycle, airlines should be doing well enough to repair their balance sheets and they’re not doing that,” said Vaughn Cordle, the chief analyst for AirlineForecasts and an airline pilot. “It really doesn’t bode well.”

While Delta, along with US Airways and Independence Air, have restructured their finances in recent months, many feel they’ve only delayed their fates.

Moves to preserve or raise cash aren’t relegated to the bankrupt carriers. Continental Airlines faced a cash crunch last month before it reached tentative agreements for $500 million in annual labor concessions.

None of the major carriers appears likely to fail or seek bankruptcy protection in coming months as they enjoy the annual surge of ticket revenue from spring and summer travel bookings, analysts said.

American Airlines says it’s comfortable with its cash levels for now, but will probably need to borrow in the future. Southwest Airlines has the industry’s strongest balance sheet and a cash reserve.

But with futures markets pointing toward crude oil staying at or above $50 a barrel, the fall could prove too much for many carriers.

Cordle predicted reckoning for US Airways, Independence Air, America West and possibly Delta by year-end.

By 2006, high fuel costs will have eaten away cash cushions at American and Northwest Airlines, he said.

If oil prices spike to $60 a barrel, few carriers beyond Southwest have the balance-sheet strength to take that kind of hit over several months, Cordle said.

Each dollar increase in a barrel of oil costs the top 13 carriers a combined $300 million. Based on $45 oil, the industry was already on track to lose more than $5 billion, he added.

“The key is really what’s going to happen with jet fuel,” said airline economist David Swierenga of AeroEcon, outside Washington, D.C. “But it’s hard to think about oil prices coming down when they’re going up — it’s like a psychological barrier.”

Strapped for cash, traditional carriers are either going to have to cut more money-losing flights as they’ve done in the past year or face more difficult confrontations with labor groups for concessions, the consultants said.

“I’ve got to think this gets much worse before it gets better,” said airline consultant Robert Mann in Port Washington, N.Y.

With $2.9 billion of that unrestricted cash to ride out the current storm, American says it’s not in danger but will need help from Wall Street to make ends meet.

To reduce its cash needs, American has deferred aircraft orders and whittled its capital expenses for coming years. The company is more than $20 billion in debt and is expected to lose upward of $400 million in the current quarter. Despite that, it’s in better shape than others.