MINNEAPOLIS (AP) — The CEO of Northwest Airlines calls skyrocketing oil prices a "serious budget-breaker." Doug Steenland warns that high fuel costs are a "difficult financial challenge" for the carrier that emerged from bankruptcy just nine months ago.

Oil jumped above 108 dollars a barrel today. Fuel is now the biggest expense at Northwest, which has a hub in Memphis, and most other airlines. Steenland said that if oil remains above 100 dollars a barrel it will cost Northwest another $1.7 billion this year. Speaking on a hotline message recorded for employees, Steenland said the oil prices are one reason he feels consolidation is inevitable.

He did not mention Delta Air Lines specifically. But the two carriers have held detailed talks about joining their operations. Their pilots met last week in Washington, but there has been no word on their progress.

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