Northwest Says It Is Cutting 565 Positions

Northwest Airlines said Monday that it will chop 565 jobs, more than half in management, as part of an urgent cost-cutting strategy to ease an increasingly acute cash shortage.

The announcement was tempered by some potentially good news for the airline from the Department of Transportation, which granted preliminary approval for a broad agreement, similar to a merger, between KLM Dutch Airlines and NWA Inc., Northwest’s parent. KLM already owns 49% of NWA.

Still, word that Northwest was eliminating 350 management and 215 union positions reflected the intensifying pressure on the airline, which has nearly exhausted a $600-million credit line with no significant sign that a substantial improvement in the airline business is coming.

If Northwest can’t raise more money from banks, suppliers, shareholders or its unions by the end of the year, the prospect of a bankruptcy court filing will greatly increase, analysts say.

That would make Northwest the seventh large U.S. carrier to seek protection from creditors in the last three years. Northwest says it doesn’t plan to file for bankruptcy protection.