By Kyle Peterson

CHICAGO (Reuters) - Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines (NWA.N: Quote, Profile, Research), set to merge to become the world's largest carrier, on Wednesday said record-high fuel costs slashed their overall valuation, leading to $10.5 billion in losses during the first quarter.

The losses posted by the two airlines' underscored the pressures facing the entire industry, which is battling fuel prices and competitive pressures that make it hard to pass those costs on to customers.

Delta, the No. 3 U.S. airline, posted a loss of $6.4 billion, or $16.15 per share. Northwest, the No. 5 U.S. carrier, posted a loss of $4.1 billion, or $15.78 per share.

Each carrier said its loss would have been significantly less had it not been for multibillion-dollar non-cash charges related to their bankruptcy exits in 2007 when the companies estimated their values.

Those values were based on oil price forecasts that were shattered in the last year as crude shot past $100 a barrel.

"We think the write-downs are significant, in that they reflect reduction in the values of these companies," said Jim Corridore, equity analyst at Standard & Poor's.

Shares of Delta tumbled initially, but later rose about 2 percent to $6.97 on the New York Stock Exchange. Northwest shares were up about 1.3 percent at $7.57 on NYSE.

The Amex airline index .XAL, which hit its lowest level on record on Wednesday was slightly lower.