NEW YORK (Reuters) ? Delta Air Lines, which narrowly avoided bankruptcy last year, said its quarterly loss nearly tripled to $1.1 billion as it struggled with pension costs and record fuel prices amid tough competition.

The carrier, which has also been pummelled by high pension costs, has cut costs aggressively over the past year. Still, analysts remain concerned about the carrier's liquidity problems.

"Based on current estimates...Delta requires at a minimum $500 (million) additional liquidity to merely limp into 2006," JP Morgan's Jamie Baker wrote in a research note.

The No. 3 US airline posted a loss of $1.1 billion, or $7.64 a share, compared with a loss of $383 million, or $3.12, a share, a year earlier.

Excluding one-time charges, Delta would have posted a net loss of $684 million, or $4.89 a share, wider than the average Wall Street estimate of a loss of $4.84 a share, as compiled by Reuters Research.

Delta said revenue rose 3.3 percent to $3.65 billion.

Delta said it ended the quarter with $1.8 billion in unrestricted cash, cash equivalents and short-term investments.

"Delta had a little bit bigger cash balance than we expected," Calyon Securities analyst Ray Neidl said. "I'm still thinking they could make it through the fall."

Delta shares rose $0.19, or 5.1 percent, to $3.89 in afternoon trading on the New York Stock Exchange, boosted by its cash on hand and proposed pension legislation in the US Senate, JP Morgan's Baker said.

A bill introduced on Wednesday would allow airlines to spread across 25 years pension payments that are due within four years.

The Atlanta-based carrier, which in September developed a plan that would save it $5 billion in annual benefits by 2006, said it has achieved $2.3 billion of that goal, and is on track to achieve the remaining $2.7 billion.

Grinstein said the main problem is high fuel costs. "The issue is simple: including fuel, Delta is not on plan, but excluding fuel, we are better than plan."

When asked by an analyst if high fuel prices might force the carrier to renegotiate with its lenders, Grinstein said it would be "fair" to say the creditors might give the airline some "additional leeway" if it came close to violating its agreements.

Grinstein also said the carrier was in "constant dialogue" with General Electric and American Express .

Another challenge for the airline is intense competition on the east coast.

"As Delta derives a material portion of its revenue from that region, we believe it could be at risk for further earnings reductions until the excess capacity is withdrawn," Merrill Lynch analyst Michael Linenberg wrote in a research note.