Posted on Thu, Sep. 01, 2005


Northwest warns bankruptcy looming

JOSHUA FREED
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MINNEAPOLIS - Northwest Airlines Corp. warned on Thursday that it is running out of time to avoid bankruptcy because of spiking fuel prices, and that it will lose as much as $400 million this quarter. Company pilots said they would negotiate a new round of pay cuts.

The carrier said in a filing with the Securities and Exchange Commission that its cash had fallen to $1.7 billion as of Wednesday, down from $2.1 billion on June 30. Some of the decrease was due to holdbacks required by the company that processes its credit card transactions, a situation that has also squeezed rival Delta Air Lines Inc. in recent weeks.

Northwest said it expects to pay $1.90 to $1.95 per gallon of jet fuel, for a total of $900 million for the quarter. It expects to spend at least that much in the fourth quarter, for a total of $3.3 billion for all of 2005. That's a 50 percent increase over the $2.2 billion it spent on fuel in 2004.

Northwest mechanics are on strike, but the nation's fourth-largest carrier has continued to fly by using replacement workers. On Thursday, it said the strike has not had a significant impact on revenue.

Northwest said it has run out of collateral for additional loans.