Northwest Airlines (NWAC) stock sank more than 50 percent to an all-time low on bankruptcy fears on Tuesday, after the company missed a payment and after a newspaper report said Northwest and Delta Air Lines (DAL) might file for Chapter 11 as early as Wednesday.

The New York Times, citing anonymous sources, said both Northwest, the No. 4 U.S. carrier, and No. 3 Delta were very close to filing for federal protection from creditors.

"The shares are down obviously on the New York Times article. That's the only news that came out before the stock began to fall," said Helane Becker, analyst at Benchmark Cos.

A Northwest spokesman said the company has made no decision regarding a Chapter 11 filing. A Delta spokeswoman said that bankruptcy is a possibility for the carrier but she made no comment on the timing of such a filing.

The bankruptcy fears came the same day as Mesaba Aviation Inc. (search) , a regional feeder carrier for Northwest, said Northwest defaulted on an $18.7 million payment due on Monday.

Shares of Northwest ended down 52.6 percent at $1.57 on Tuesday on Nasdaq. The shares had dipped as low as $1.26 earlier in the session. In the past year, the shares have traded as high as $11.83.

Delta shares, which had lost more than 22 percent on Monday, fell 7 cents, or another 8.2 percent, to 78 cents.

The Times report said both Northwest and Delta were putting the finishing touches on their bankruptcy cases and that both are prepared to file in the United States Bankruptcy Court (search) in New York.

S&P analyst Jim Corridore said he was surprised to read that Northwest was considering filing for Chapter 11 so soon.

"I didn't think that bankruptcy was imminent for Northwest. I had felt they had enough cash to stay out of bankruptcy a little longer," he said.

Corridore and Becker said they thought it was possible, however, that Northwest could file before October 17, when a new bankruptcy law makes it tougher and more expensive to go bankrupt.

The airline industry has been battered by soaring fuel costs and low-fare competition. UAL Corp's (search) United Airlines and US Airways (search) both are nearing the end of their own periods operating under Chapter 11.

Also on Tuesday, Northwest began hiring replacements for striking workers, but the union representing the employees said the No. 4 U.S. carrier could not function properly without the strikers' expertise.

Northwest has said the strike by the 4,400 members of the Aircraft Mechanics Fraternal Association (search) has caused no significant service disruptions. But the airline said it would welcome back any workers who wish to cross the picket line.

AMFA members began the strike on August 20 after the two parties failed to reach a deal on a labor contract that would save Northwest $176 million a year. The carrier has continued to fly using replacement workers and outside vendors.

AMFA has said Northwest was suffering from the strike and that the workload would overwhelm the replacement mechanics who are less familiar with Northwest's fleet.

Negotiations resumed last week but broke off again on Sunday. The union said Northwest has raised its demands for concessions to $203 million annually and proposed cutting 75 percent of its members from the payroll.

Northwest has confirmed that it now was seeking the higher amount from the mechanics.

Northwest had said it needs $1.1 billion in annual labor cost savings to restructure and avert bankruptcy, but that it may need to raise its savings target to offset rising fuel prices.