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Nov 13, 2008 3:18 pm US/Central
Delta: Deal On Old Loan Could Save Minn. Jobs
ST. PAUL (AP) ―
Delta Air Lines might commit to keeping additional jobs in Minnesota in exchange for getting out of a promise by Northwest Airlines to keep its headquarters here, an executive said on Thursday.
Delta acquired Northwest last month, and the combined airline is based in Atlanta. Delta's newest subsidiary still operates separately and remains based in Minnesota.
Northwest promised to keep its headquarters and a hub here in exchange for government backing on bonds issued in 1992. About $245 million is still owed on those bonds. The state or the Metropolitan Airports Commission can require accelerated repayment if Northwest's headquarters leaves, which will happen once it finishes integrating with Delta sometime in the next 18 months.
Delta CEO Richard Anderson -- who used to hold the same job at Northwest -- told Congress earlier this year that some jobs would stay in Minnesota, such as pilot and flight attendant bases, the cargo operation, and pilot training and a data center.
Northwest currently employs about 11,500 people in Minnesota, including 1,000 at its Eagan headquarters. Delta has some 75,000 employees.
Ben Hirst, the general counsel for Delta Air Lines Inc., said on Thursday at a state Legislature committee hearing that Delta would be willing to add additional job categories to those promised by Anderson if the Metropolitan Airports Commission agrees not to force early repayment of the bonds.
Hirst was general counsel at Northwest in the early 1990s and worked on negotiating the original agreement with the state.
"Some of the airline operations that Delta is prepared to consider locating here, it might locate elsewhere," he said after the hearing. He declined to be specific because Delta is preparing to negotiate the issue with the state and the airport authority.
Hirst said Delta wants to wrap the matter up within two months.
"I think it's necessary because otherwise the kinds of decisions that we have to make will be made and they may not involve Minnesota," he said.
Airport spokesman Patrick Hogan said the airport is waiting for a written proposal from the airline and that no formal talks have been scheduled.
The whole topic is politically touchy here. The 1990s loan package was widely seen as a bailout from the state, although Northwest has steadfastly insisted that was not so, and that it was a mutually beneficial arrangement that kept extra jobs in Minnesota.
On Thursday, state lawmakers asked some pointed questions, with one seeming to suggest to Hirst that the state might raise taxes on items such as aviation fuel. Another asked the lawyer for the airport authority why stricter penalties weren't negotiated to force Northwest to keep its commitments.
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