Northwest Airlines' credit rating got a downgrade from Standard & Poor's on Friday, prompted by high fuel costs and expectations that the airline could erode cash reserves in coming months and lose money this year.

The credit rating company lowered Northwest's long-term corporate credit rating a notch further into junk, to B from B+ with a negative outlook. A lower credit rating can reduce a company's access to capital and make it more expensive to borrow money.

Atlanta-based Delta Air Lines plans to merge with the Minnesota-based carrier by year's end, pending regulatory and shareholder approval.

Delta President Ed Bastian said in February — before the deal with Northwest was announced — that any merger would have to avoid burdening the combined airline with excessive debt.

S&P expects Northwest's unrestricted cash of $3.3 billion to erode because of high jet fuel prices and the economic downturn. It also forecast Northwest's annual loss could be more than $500 million before special charges.

Northwest had a second-quarter profit of $170 million, excluding a goodwill write-down; it also benefited from a $250 million gain on hedges to help pay for future fuel purchases.

Northwest and other major carriers downgraded Friday "are large and viable airlines," S&P airline analyst Philip Baggaley said in a conference call.

"If we're still in a very weak environment a year from now, it could begin to get more uncomfortable," he said.

Delta spokesman Kent Landers said Friday that Delta and Northwest are "two of the strongest airlines in the industry." The merger "will build an even stronger airline," he said.

Both Delta and Northwest emerged from bankruptcy protection last year with much of their debt erased.

S&P also downgraded American Airlines parent AMR Corp. and United Airlines parent UAL Corp.

Separately, Merrill Lynch upgraded Delta shares to buy from neutral, saying Delta is in the best position to benefit from airline capacity cuts this fall.