DELTA Air Lines Inc said yesterday it swung to a hefty loss in the second quarter despite a strong increase in sales, pushing its red ink to more than US$7 billion since the start of the year.

The results, hit by unprecedented fuel costs and a decline in the company's market value, still beat Wall Street estimates when one-time items are excluded.

The Atlanta-based company also said it expects to achieve US$2 billion in cost savings by 2012 from its acquisition of Northwest Airlines Corp. That is double what it estimated when it announced the deal on April 14. It also said it expects to spend only US$600 million in cash to integrate the two companies, compared to an earlier projection of US$1 billion.

For the three months ending on June 30, Delta said it lost US$1.04 billion, or US$2.64 a share, compared to a profit of US$1.59 billion a year ago when Delta emerged from bankruptcy protection. A year ago, it reported a different figure for its net income - US$1.77 billion - which a spokeswoman said was due to fresh-start accounting.

Excluding one-time items, Delta earned a profit of US$137 million, or 35 cents a share, in the second quarter. Analysts polled by Thomson Financial, on average, forecast profit of 10 cents a share. Their estimates usually do not include one-time items.

Revenue rose 10 percent to US$5.5 billion, compared to US$5 billion recorded a year earlier.

Delta recorded special charges totaling US$1.2 billion in the second quarter, including a US$1.1-billion non-cash charge, net of a US$119-million tax benefit, related to the decline in Delta's market value due to sustained record fuel prices.

Additional special charges included a US$96-million severance charge for previously announced voluntary workforce-reduction programs and a US$6-million charge related to facilities restructuring.

For the first six months of the year, Delta said it lost US$7.43 billion, or US$18.79 a share, compared to a profit of US$1.46 billion for the same period a year earlier. Six-month revenue increased to US$10.27 billion, compared to US$9.24 billion a year earlier. As of June 30, Delta had US$4.3 billion in unrestricted liquidity, including US$1 billion available under a revolving credit line.