Updated from 5:38 p.m. EDT

Northwest Airlines'

( NWAC) stock lost more than half of its value Tuesday amid speculation the airline was close to filing for bankruptcy protection.

On its Web site, Northwest's arm of the Air Line Pilots Association said the company's board will meet Wednesday to decide whether to seek relief under Chapter 11. The union has a seat on Northwest's board, and ALPA's representative will attend the meeting.

The New York Times

had reported earlier Tuesday that Northwest and

Delta Air Lines

(DAL) - Get Report

are preparing to file for bankruptcy as soon as Wednesday.

Citing people close to both companies, the report says Delta and Northwest are finishing details of their filings but the fundamental work of each case is complete. If both file, it would mean four of the seven largest U.S. airlines would be operating under bankruptcy protection.

Separately, Northwest submitted documents to the

Securities and Exchange Commission

late Tuesday that further heightened speculation that bankruptcy is near. In it, Northwest acknowledges failing to make $23 million in aircraft finance payments due in recent days, as well as an $18.7 million payment due Monday to regional partner Mesaba Airlines, a subsidiary of

MAIR Holdings

( MAIR).

The filing says Northwest hasn't decided whether it will make these payments within the allotted grace periods. Instead, the airline is "engaged in an analysis of its debt, lease and other obligations to determine which obligations should be targeted for restructuring. The obligations with respect to which payments were not made are among those that the company has identified that it could seek to restructure as part of a transformation plan."

Additionally, the filing states that Northwest has a $65 million contribution to its pension plans due Thursday, but adds that if the carrier fails to make the payment, "a lien would automatically arise against its assets unless the company had previously sought bankruptcy protection."

Northwest representatives said the company has made no decision regarding a Chapter 11 filing and declined to comment further on the filing. The airline's shares fell as much as 62% after the

Times

story ran and finished the session down $1.74, or 52.6%, at $1.57.

Earlier, a Delta representative declined to comment on reports it was preparing a bankruptcy filing. Although Delta is widely expected to file for Chapter 11 this week, a possible Northwest filing wasn't expected so soon. Delta shares lost 7 cents Tuesday to 78 cents.

Both airlines' shares would likely end up worthless if they file for bankruptcy. When airlines emerge from bankruptcy protection they typically cancel existing common stock and issue new shares to pay creditors.

Like the rest of the airline industry, Delta and Northwest have struggled with ever-higher fuel prices, which hit new highs in the wake of Hurricane Katrina. Delta's efforts to cut costs and streamline operations haven't been enough in the face of increasing fuel costs.

Northwest, meanwhile, says it still needs significant concessions from employees to remain competitive. It recently raised its overall labor savings goal to $1.4 billion a year from $1.1 billion, according to its striking mechanics union.

Delta and Northwest also have large pension obligations and have lobbied lawmakers for extra time to fund their plans.

The nation's second-biggest carrier,

United Airlines'

parent

UAL

, has been operating under bankruptcy protection since December 2002 but last week said it planned to exit Chapter 11 early next year.

US Airways

( UAIRQ) is making its second trip through Chapter 11 since the Sept. 11 terrorist attacks helped send the airline industry into a tailspin. It plans to leave bankruptcy protection later this month through a merger with

America West

( AWA), whose shareholders approved the deal Tuesday.

Also in the top-seven U.S. carriers are

American Airlines'

parent

AMR

(AMR)

and

Continental Airlines

(CAL) - Get Report

. Analysts consider those two in better financial shape than Delta and Northwest.