Editorial: State should hold firm in talks with NWA

There's no need for yet another bailout in merger with Delta.

Last update: April 15, 2008 - 7:20 PM

The dating game is finally over: If regulators approve of the pairing, Northwest and Delta airlines will merge before the end of the year, creating the world's biggest carrier. It's clear that the proposed marriage is a bold and risky strategic move in a boom-and-bust industry desperate for stability. What the deal will mean for Northwest's home state is less certain.

For a number of reasons, a Northwest-Delta merger could be the best possible combination for Minnesota. The Twin Cities hub is a valuable asset that would be protected -- not dismantled -- giving Delta new strength in the Upper Midwest. Delta CEO Richard Anderson, who would lead the merged carrier, once held the same job at Northwest, and it was believable when he called Northwest CEO Doug Steenland a partner during a Tuesday news conference. Anderson is a skilled leader who's been able to work effectively with organized labor in the past. Those skills will be tested in merging heavily unionized Northwest with mostly nonunion Delta.

In the face of high oil prices, a slowing U.S. economy, aging fleets and more intense global competition, airline consolidation was a given. It's expected that other merger announcements will follow the Northwest-Delta deal. Given the alternatives, a Northwest-Delta combination makes the most sense.

That does not mean Minnesota should be celebrating. If the merger goes through, Minnesota will lose a Fortune 500 headquarters to Atlanta, notwithstanding a farfetched proposal by some Republican legislators to keep it in the Twin Cities through tax incentives. An unknown number of overlapping jobs will be cut as the companies look for savings. It's also troubling that pilots at the two airlines weren't able to work out a seniority agreement before the announcement. Labor unrest could severely hamper a merger and create nightmares for the flying public. There's also a possibility that the global strategy could fail, and that merging the two struggling carriers would simply create one large, troubled airline.

Minnesota has an enormous stake in the outcome, including a total of $445 million in loans and lease benefits provided to Northwest in 1992, when the airline almost filed for bankruptcy protection, and in 2007, when the carrier did reorganize under Chapter 11.

That state aid is tied to guarantees that the company would keep its headquarters in Minnesota, and it's tempting to urge Gov. Tim Pawlenty to ask Anderson for a check the day a merger is finalized and the champagne flows in Atlanta, but it looks like talks are continuing.

On Monday, both Anderson and Pawlenty mentioned the possibility of renegotiating terms, and the Delta CEO pledged to fulfill the "spirit'' of the earlier agreements. Count us among the skeptical. Minnesota taxpayers have bailed out Northwest before, with mixed results. If state leaders negotiate away the headquarters guarantees, they'd better get something of equal or greater value in return, along with an enforceable agreement.

For consumers, time will tell if an even more consolidated airline industry will be better equipped to deliver the basics: safety, reasonable fares, on-time service and efficient options for business and leisure travel.

Given the current instability in the industry, it's difficult to imagine a smooth flight.

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