Updated from 11:58 a.m. EDT

Delta Air Lines

(DAL) - Get Report

shares jumped more than 20% Monday after the nation's third-largest airline appeared to be making progress on financing and labor fronts.

Delta announced that it entered into an agreement with

American Express

(AXP) - Get Report

that would provide the airline with up to $600 million in financing.

Up to $100 million will be in the form of a loan from American Express as part of a new credit facility Delta is negotiating with other lenders, the airline said in a news release. The airline has yet to receive commitments from those other lenders. In addition, as much as $500 million would come from American Express prepaying future SkyMiles purchases from Delta. SkyMiles is the airline's frequent-flyer program.

A Delta spokeswoman declined to elaborate on the announcement but said the airline would provide greater detail in a

Securities and Exchange Commission

filing later Monday afternoon.

The news comes as Delta appears on the verge of seeking Chapter 11 bankruptcy protection. Last Wednesday, Delta reported a net loss of $646 million, or $5.16 a share, for the third quarter, much worse than the loss of $164 million, or $1.36 a share, it logged a year earlier. The airline is trying to restructure some of its $20 billion in debt at a time record-high fuel prices are causing expenses to balloon. Meanwhile, the company's unrestricted cash has fallen below the $1.5 billion level.

Shares of the recently volatile stock were up 68 cents, or 21.0%, to $3.92. The Amex Airline Index was up 3.9%.

Shares initially rose Monday on hopes the airline and its pilots union were nearing agreement on wage concessions, which are crucial to the company's efforts to stay out of bankruptcy protection. Negotiators for Delta and the Air Line Pilots Association, which represents more than 7,000 of the carrier's pilots, were "close" to an agreement, although significant gaps remained on issues including how much stock pilots would receive in exchange for wage and benefit cuts,

The Wall Street Journal

reported Monday.

The Delta spokeswoman said the airline was continuing to negotiate with the union but declined to elaborate.

A lot rides on the talks. Company officials are preparing to file for Chapter 11 bankruptcy protection as early as Wednesday if an agreement isn't reached, the newspaper reported, citing sources familiar with the situation. Delta has repeatedly warned it might have to take that drastic step.

Last Wednesday, Delta reported a net loss of $646 million, or $5.16 a share, for the third quarter, much worse than the loss of $164 million, or $1.36 a share, it logged a year earlier. Network rivals such as American Airlines parent

AMR

(AMR)

,

Continental

(CAL) - Get Report

and

Northwest

(NWAC)

also reported quarterly losses, although none was nearly as large as Delta's.