Northwest Faces Possible Strike, Other Problems

Looming right behind the question of whether Northwest Airlines Corp. mechanics will strike this week is another: Has the airline moved too late to avoid bankruptcy?

Analysts are starting to wonder -- even assuming Northwest gets the $1.1 billion in cuts it wants from its unions.

Northwest lost more money in its last quarter alone than it proposes to save from mechanics each year. It faces hundreds of millions of dollars in pension payments next year. And jet fuel remains stubbornly expensive.

“We think the risk of bankruptcy is too high to continue to hold the stock,” Standard & Poor’s analyst James Corridore wrote in a research note advising investors to sell.

He’s not swayed by Northwest’s $2.1 billion in cash. “They’ve got what seems like a pretty high amount of cash, but a lot of that is dedicated to funding operating losses, or pending debt maturities,” he said in an interview.

Most of the nation’s older carriers are struggling. United Airlines and US Airways Group Inc. are in Chapter 11. Northwest and Delta Air Lines Inc. have both said they might be forced into bankruptcy too.

Northwest has said it needs those worker pay cuts and changes in pension law to stay out of Chapter 11. Under current law, it would need to contribute $800 million to its pensions in 2006 and $1.7 billion in 2007.