WSJ: Chapter 11 for Northwest Airlines?

The Wall Street Journal has an interesting piece in today's paper suggesting that Northwest Airlines is "perilously close" to following US Airways and United Airlines in seeking Chaper 11 bankruptcy protection.

Unfortunately the article is only available on-line for subscribers, but here are a few choice grafs about the troubled company.

Bad news is stacking up at Northwest like jets circling Detroit's Metro Airport on a stormy evening. The company's stock has lost 42% this year but was up nine cents, or 1.4%, to $6.33 in 4 p.m. Nasdaq Stock Market composite trading Friday. On June 1, Fitch Ratings pushed the company's unsecured debt rating deeper into speculative, or junk, territory, downgrading it to triple-C-plus from single-B and citing unsustainably high labor costs and pension-plan obligations.

Gary Wilson, the airline's largest individual shareholder and its nonexecutive chairman, has been selling his stakes at a brisk pace. The company is girding for possible labor strikes, and a bankruptcy-court filing could be an option if Northwest can't persuade Congress to change pension law.

Northwest, the nation's fourth-largest airline by passenger traffic, is being hurt by problems affecting mature U.S. carriers: weak pricing, high fuel prices and the rapid growth of discount airlines. But the Eagan, Minn., company, with a market value of about $552 million, also is facing challenges because rivals have extracted concessions in Chapter 11 or under the threat of it, leaving Northwest with the U.S. industry's highest labor costs.

Reporter Susan Carey waits until the final graf to deliver the juicy details on Chairman Wilson's stock firesale:

Adding to anxiety is heavy insider selling, paced by Mr. Wilson. According to Securities and Exchange Commission filings, Mr. Wilson had cut his stake to 1.75 million shares as of last week from 4.34 million shares on March 31. A Northwest spokesman said on Mr.Wilson's behalf that the executive is diversifying and remains a big shareholder.  

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