Major Northwest operations will stay in Minnesota

A merged Delta and Northwest would retain its pilot training facility in Eagan, its reservation centers in Minneapolis and Chisholm, and its pilots and flight attendants who are currently based in the Twin Cities. Delta CEO Richard Anderson said those jobs would remain as part of an ongoing commitment to the state by the combined company.

Other jobs that would still be in Minnesota include aircraft maintenance work and airport operations.

"The [Twin Cities] hub will be a very important hub of the combined network," Anderson told Star Tribune reporters and editors. "You're not going to move functions unless it makes sense to move functions."

Anderson and Northwest CEO Doug Steenland indicated that by keeping major operations here, they hope to remain in compliance with the "spirit" of loan covenants that Northwest previously signed with the state of Minnesota for a $245 million loan.

Those covenants call for Northwest to maintain its hub and corporate headquarters. Some of those covenants could be violated by the merger, particularly the headquarters clause, because Atlanta would be home for the merged airline.

"We want to maintain the spirit of those covenants," Steenland said.

Northwest has 12,000 employees in Minnesota. Keeping the two reservation centers open, for instance, would affect about 900 employees, and 2,200 flight attendants would continue to be based at the Twin Cities. Steenland and Anderson did not address the future of the roughly 1,000 jobs at Northwest headquarters in Eagan.

Steenland and Anderson have acknowledged meeting with Gov. Tim Pawlenty to discuss the loan agreement and ways to avoid defaulting on the debt. But the new airline will have $7 billion in cash and could pay off its state obligation if necessary.

"It's affordable, but that's not what we want to do," Anderson said. "Merging is time-consuming. It will probably be 12 months after closing [likely late this year] before the covenant issue is even raised."

Delta and Northwest announced the all-stock acquisition of the Eagan-based carrier this week after four months of preparation. The combined carrier would be the largest in the world.

Hiccups or worse still remain for the two carriers before the deal is done. Northwest's unions are concerned about losing representation once they join the ranks of non-union Delta employees. Meanwhile, Northwest's pilots lack a seniority agreement with Delta pilots. And Rep. James Oberstar, D-Minn., a strong voice in Washington on transportation issues, opposes the merger as anti-competitive.

But Anderson and Steenland remain undeterred, particularly in an environment where oil is selling for nearly $115 a barrel and economies of scale are becoming more important.

"People don't always like change," Anderson said. "When you're merging two airlines that both have been around since the mid-1920s there's a visceral reaction. But together, Delta and Northwest are the strongest for passengers and employees in this environment."

Whether or not the merger occurs, fares are going to rise because of fuel costs, Steenland said. Anderson added that because of the high cost of fuel, Delta will reduce its capacity by 10 percent by the end of this year.

But, Anderson said, Delta and Northwest will complement each other's domestic and international route structures. In addition, the two U.S. carriers also have a recently approved agreement with KLM Royal Dutch Airlines and Air France that allows them enter into a joint venture for transatlantic flying.

"We're trying to build a long-term foundation that is durable," Anderson said.

David Phelps • 612-673-7269