Northwest Says Time Short to Avoid Chapter 11

Northwest Airlines Corp. warned that it was running out of time to avoid a bankruptcy filing because of rising fuel prices, and that it would 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 its third-quarter loss would be $350 million to $400 million, but possibly worse depending on the financial effect of Hurricane Katrina.