The planned Delta-Northwest merger will cause short-term pain but should be beneficial in the long run, credit rating firm Standard & Poor's said.

The estimated $1 billion in merger-related costs will strain the airlines, which are already feeling some of the same financial pressures that sent them into bankruptcy protection nearly three years ago.

But the combination also will relieve some competitive pressure and allow the carriers to raise ticket prices, Standard & Poor's airline analyst Philip Baggaley said Thursday in a report based on his testimony to Congress earlier this week.

Baggaley said he sees "significant risks" in the costs and operational challenges of the merger, which Delta and Northwest executives hope will generate $1 billion annually in higher revenues or lower costs by 2012.

"Cash outlays could exceed benefits in the first year of the merger," Baggaley said in his testimony.

Meanwhile, fuel costs that are about 50 percent higher than last year threaten to wipe out most of the cost-cutting Atlanta-based Delta, Eagan, Minn.-based Northwest and other carriers did in recent restructurings, said Baggaley.

"Absent any other changes [such as higher revenues], this fuel price shock could bring many of them close to bankruptcy by early next year," he said.

Worries that merger-related costs could put more pressure on airlines' cash reserves could be chilling merger talk among other carriers as they battle rising fuel bills. Continental recently announced that it was not interested in pursuing merger talks with United.

United also could be taking a more cautious approach in ongoing talks with US Airways, according to press reports.

Baggaley warned that airline mergers have a "checkered record" because of the difficulty of merging unionized labor groups and disparate aircraft fleets, computer systems and other operations.

"We expect that the actual synergies may be less than Delta and Northwest forecast," said Baggaley, noting that US Airways and America West are still trying to finish putting together their operations after their 2005 merger. Still, the merger "probably saved US Airways from liquidation," he added.

Airlines face a "financial crisis" this year if they don't raise fares to offset higher fuel costs, he said.

"If this were a regulated utility, the companies would be applying for rate increases based on higher input costs," Baggaley said. It will be "somewhat easier to raise fares in a consolidated industry."