Airport leader wants facts on Delta plans for Minnesota

The Metropolitan Airports Commission chairman said Wednesday that it is "in Delta's best interest" to present MAC and state leaders with a specific plan about what presence Delta intends to maintain in Minnesota after it acquires Northwest Airlines.

Chairman Jack Lanners told business leaders at a Minneapolis event that the MAC holds "leverage points" over Delta and Northwest, and it could require a merged Delta to immediately pay off $230 million in bond debt when Northwest's Eagan headquarters closes.

The loan covenants between MAC and Northwest require the carrier to retain its headquarters and hub in the Twin Cities, and certain employment levels in Minnesota.

Delta's plan would affect whether MAC and state leaders "fully enforce, partially enforce or redirect their thinking" about the timetable for repaying the bond debt, Lanners said.

Under the agreement, Northwest has until 2022 to pay off the debt.

"I have seen that the headquarters will move to Atlanta and I have seen that the system operations center is intended to move to Atlanta," Lanners said in an interview. "Those are all very good jobs that Minnesota now enjoys."

Northwest CEO Doug Steenland and Delta CEO Richard Anderson have said repeatedly that the vast majority of Minnesota jobs would be preserved after a merger. Northwest employed about 11,500 to 12,000 people in Minnesota this spring, but the carrier is reducing its systemwide workforce by 2,500 in response to high oil prices.

He also pledged to maintain a pilot training facility and a data center in Eagan. Those commitments were extracted by Sen. Amy Klobuchar, D-Minn.

Tom Anderson, MAC's general counsel, said he's aware of public statements made by Delta and Northwest executives.

"We are waiting to hear their proposal," he said. "Are they going to try to reassure people or create leverage?"

In a May speech to business leaders, Steenland said the merged airline is "prepared to pay off that obligation" of debt on the MAC bonds. But he said the executives want to renegotiate the terms of Northwest's loan deal with the MAC.

Airport leaders want answers

While the parties involved have talked about the loan repayment issue, Anderson said, "There have been no formal negotiations."

Northwest spokeswoman Tammy Lee said the company is in compliance with its lease and bond terms. "Any further discussion is premature," she said.

If the MAC strictly enforces its loan covenants, it could force the merged airline to pay the bond debt quickly in one sum. However, it's unclear what would trigger a violation of the agreement to keep a Twin Cities headquarters.

The merger deal is expected to close late this year. But Northwest would continue to operate as a free-standing airline for a year or more while Delta awaits approval of a federal operating certificate for the merged airline. During that transitional period, Northwest would be a Delta subsidiary and led by the current Delta president, Ed Bastian.

Delta announced in mid-July that Bastian would also become CEO of Northwest, and he sits atop a new Northwest executive organization chart.

The answer may matter. When evaluating whether the headquarters requirement has been violated, the MAC's Anderson said he will look at the location of the executives who are making decisions about Northwest's operation.

"Delta intends to work closely with the authorities in Minnesota on these important issues," Black said. "Minneapolis-St. Paul will play an important long-term role in the new Delta."

Flirting with other airlines

Jeff Hamiel, the MAC's executive director, said that the Twin Cities has been a profitable hub for Northwest. But MAC officials have been scouting other carriers for service in Minnesota.

Hamiel said he and Lanners traveled to Texas this spring to make a call on Southwest Airlines, but the low-fare carrier did not make any commitments to start service in Minnesota.

Northwest leases 101 of the 117 gates at the Lindbergh Terminal, where six gates are available for new entrants.