MINNEAPOLIS (AP) -- Northwest Airlines Corp. shares sank further on Tuesday, as its chief executive said the airline must get labor concessions by the end of 2005 or face the possibility of bankruptcy.
But chief executive Doug Steenland also said a pay cut offer by mechanics was inadequate, and flight attendants have repeated their opposition to cuts. Northwest shares sank 24 cents, or 5.4 percent, to close at $4.19 on the Nasdaq Stock Market, a new 52-week low.
''If we are unsuccessful in realizing labor cost restructuring, we are going to have to consider the Chapter 11 bankruptcy option,'' Steenland said Tuesday in a speech to Minneapolis business leaders.
Steenland's comment was similar to a statement made by Northwest in a filing with the Securities and Exchange Commission on Friday afternoon.
Northwest has been seeking $1.1 billion in labor cost savings from its workers, and on Tuesday Steenland repeated that Northwest wants those savings by the end of 2005. In response to a follow up question, Steenland declined to say whether that meant Northwest would file for bankruptcy after the end of the year.
Northwest pilots have already taken a pay cut. The airline said it wants $176 million from mechanics. Mechanics said they've offered $143.5 million _ but Northwest says it really only amounts to $87 million. And Steenland said their offer would have their pay snap back to previous levels after two years. Both sides have made strike preparations.
Flight attendants, meanwhile, are offering no concessions at all. ''The flight attendants are not in a position where they're going to give anything at this point,'' Professional Flight Attendants Association vice president Jeff Gardner said after listening to Steenland's speech.
In the SEC filing on Friday, Northwest said its ''financial viability primarily depends on'' labor cost cuts and a change in pension laws that would allow it to spread out payments to its underfunded pension. Northwest said current pension law would require it to pay $800 million in 2006 and $1.7 billion in 2007 to its pension.
''Failure to obtain pension funding relief will also cause the company to consider Chapter 11,'' it wrote in the filing.
But Prudential analyst Bob McAdoo said in a note to investors Tuesday that strike talk is common in the airline industry, and that he believes Northwest will get labor cuts. ''We would be surprised if there is any resolution to the labor issues in the very near future,'' he wrote.
''It is unlikely Northwest will seek bankruptcy protection anytime in the near future,'' he wrote. ''Its labor negotiations, whether successful or not, will likely to drag on well into 2006. Its troublesome catch-up pension payments do not occur until 2006.'' And even if it fails on both pension reform and labor costs, more cheaper oil would probably be enough to keep Northwest out of Chapter 11, he wrote.
Oil prices have surged above $60 a barrel recently. Steenland said Northwest's costs increase by $50 million a year for every dollar increase in a barrel of oil.
Northwest is looking for other ways to make more money, Steenland said. It recently stopped giving away even pretzels on domestic flights in favor of a bag of trail mix that it sells. Steenland also noted a new fee for luggage service.
