Northwest Airlines owes the state of Minnesota $245 million in accelerated loan repayments when a merger with Delta Air Lines moves company headquarters to Atlanta. But the Metropolitan Airports Commission (MAC), which oversees the loan, says it's open to compromise.
"We'll use the contracts and tools we have as leverage to get the best deal we can get, but how it will end up is difficult to say," MAC Chairman Jack Lanners said. "We're set up to negotiate or enforce the contracts."
But some state lawmakers disagree. They've introduced legislation that would force Northwest to repay the full $245 million.
"In return for Minnesota taxpayers' support, the airline made many promises, including a commitment to remain in Minnesota and retain jobs," said one of the sponsors, Sen. Scott Dibble, DFL-Minneapolis. "These promises can't be abandoned in light of the merger."
Under the terms of a $290 million state loan to NWA in 1992, the airline would have to repay $245 million in bond debt for violating one of the loan's key terms, which is that Northwest's corporate headquarters remain in Minnesota.
NWA and Delta have said the combined company's headquarters would be in Atlanta.
Besides the loan repayment, shifting the headquarters out of state also would cause Northwest to lose future lease benefits at the airport, including nearly $68 million in rent reductions and nearly $147 million in airport concessions revenue sharing. A portion of both those amounts already has been paid to NWA under agreements that stretch from 2006 to 2020 and can't be recouped by the state, MAC spokesman Pat Hogan said.
Other MAC members also are inclined to review an NWA proposal before demanding a $245 million payback.
"I may be less inclined to be demanding [of NWA] at this point than to say, 'Let's look at the big picture and see what's best for us,'" said MAC member Lisa Lebedoff Peilen of St. Louis Park. "So far I haven't seen any details from the airline that are specific to airport operations or jobs."
"We'll wait to see what type of a proposal Northwest comes up with," said MAC member Andy Westerberg of Blaine. "My guess is it will be a long, drawn-out process."
Even the accelerated repayment could be drawn out, Lanners said, because Northwest would be given "a couple of years" to come up with the $245 million, which normally wouldn't have been completely repaid until 2022.
For now, he is awaiting details of how the merger will affect Minnesota jobs and airline service. MAC members will meet Monday to discuss the merger, but Lanners doesn't expect to have a proposal from Northwest by then.
The pending legislation would require NWA to repay not only all bond obligations but also all airport rent reductions previously granted by the Legislature. It was introduced by Dibble, Rep. Frank Hornstein, DFL-Minneapolis, and Rep. Michael Paymar, DFL-St. Paul.
The three cited other incentives the Legislature has given Northwest over the years, including a $109 million MAC construction program for NWA, a $4 million exemption from corporate franchise tax in 1995, a $2.5 million tax break on leased airplanes in 1996 and dropping plans in 1996 for a larger airport that would have allowed more competition.
The MAC is looking forward to new commitments as well as worrying about existing ones. It has been trying to attract another airline to the Twin Cities airport to spur competition, since the combined Delta-Northwest would control 85 percent of the airport's gates.
"We're aggressively trying to attract new carriers," Lanners said. "We now have six contiguous short-term use gates that the MAC could take for a new carrier that was willing to come here."
Steve Alexander • 612-673-4553