DELTA and Northwest Airlines filed for Chapter 11 bankruptcy protection last night as the rising price of jet fuel, massive employment costs and mountainous debts combined to cripple another two of America’s biggest airlines.

After the filings, which were made after the stock market closed on Wall Street, three of America’s top four airlines were operating under bankruptcy protection conditions. Analysts and investors immediately called for consolidation to save the industry from collapse.

“This is unprecedented,” John Heimlich, chief economist at the Air Transport Association in Washington, said. “It clearly shows you that at this fuel price there is not enough revenue to go around. There has to be consolidation at this point.”

Jet fuel prices have risen by 65 per cent this year as the price of oil has soared. Delta, with $20.5 billion (£11.25 billion) of debts and $21 billion of assets, was by far the bigger bankruptcy of the two filed last night. And at $41.5 billion it ranks as the ninth largest company collapse in US history.

General Electric was last night expected to offer the airline a $1.7 billion lifeline to help to restructure its operations.

Chief among Delta’s concerns will be reducing its debt and the cost of leasing aircraft. The company will also seek greater wages and benefits cuts from pilots’ and flight attendants’ unions.

Atlanta-based Delta was founded in 1928 and became an international player when it took over routes from Pan Am, which went bust in 1991. It is the third US airline to seek bankruptcy protection as the sector battles against rising costs and falling revenues. US Airways has sought bankruptcy protection twice in the past three years and United has also filed for Chapter 11.

Delta’s woes have worsened in recent weeks as a record number of pilots took early retirement in anticipation of its bankruptcy filing. Many opted to take 50 per cent of their benefits as a cash lump sum.

Northwest, America’s fourth-largest airline, and the fourth to seek Chapter 11 protection, failed on Tuesday to make a $42 million payment to service its debts. The Minnesota-based carrier also had a $65 million pension payment due today. That payment will be delayed because of the bankruptcy filing. The airline, which started 79 years ago carrying mail, was also hobbled by a recent strike by mechanics.

The troubles of the American airline industry continue to worsen despite growing numbers of passengers. The industry is expected to record a combined loss of up to $10 billion this year, according to analysts.

Chris Tarry, an independent airlines analyst, said that Delta and Northwest faced an almost impossible task. “Their costs are too high and their revenues are too low, and there is too much capacity in the industry. They should not survive, but as long as Americans need to travel by plane they will. Chapter 11 will enable them to reorganise to some degree but the overriding problems do not go away.”

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