Delta/NWA still face pressure from Minnesota--article

[General Lee]

Delta-Northwest face pressure from Minnesota

Thu Feb 21, 2008 6:56pm EST

By Chris Reiter

NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research), still trying to win backing for a merger from their pilots, face another hurdle in their effort to create the world's largest airline.
Before exiting bankruptcy last year, Northwest agreed to maintain a hub and headquarters in Minnesota in exchange for $445 million in loans and lease concessions at its Minneapolis operations.
If it merges with larger Delta and moves its headquarters to Delta's home in Atlanta, Northwest may have to repay $245 million in outstanding debt on bonds that Minnesota's Metropolitan Airports Commission issued on Northwest's behalf.
It also may have to give up $200 million a year in savings, stemming from a renegotiated lease agreement in Minneapolis.
"There has not been a resolution," said Patrick Hogan, a spokesman for the Metropolitan Airports Commission. "They have a legal commitment to this state, and we expect them to uphold it."
The potential Northwest-Delta merger has drawn attention of politicians and lawmakers. Minnesota Governor Tim Pawlenty wrote to the chief executives of both airlines saying, "We trust and expect these commitments to be honored.
He also offered "additional commitments" to Delta and Northwest to maintain the headquarters and full operations in his state.
The airlines are not in a rush to resolve the issue before agreeing on a merger.
"The airlines have said they are interested in having that conversation (about Northwest's agreements with Minnesota) at the appropriate time, after a merger is announced," Brian McClung, Pawlenty's spokesman, said via e-mail on Thursday.
Northwest spokesman Dean Breest said the airline "is well aware of the importance to Minnesota of the Minneapolis-St. Paul hub and the jobs in Minnesota produced by our airline operations."
Northwest intends to "ensure the long-term survival of the Minneapolis-St. Paul hub and the Minnesota jobs we support," he said.
(Editing by Leslie Gevirtz)



© Reuters 2008 All rights reserved



Bye Bye--General Lee

 

[QuasarZ]

I hope they do keep the full operation in MN, it is one of the largest employers in the state.

 

[johnsonrod]

I hope they do keep the full operation in MN, it is one of the largest employers in the state.

You also have Best Buy, Target, 3M, Pillsbury, Carlson, United Healthcare and others... The hub would remain - you might lose a few hundred management positions. I'm sure DAL/NWA would provide something else in return.

 

[800Dog]

You also have Best Buy, Target, 3M, Pillsbury, Carlson, United Healthcare and others... The hub would remain - you might lose a few hundred management positions. I'm sure DAL/NWA would provide something else in return.

Any good strip clubs? I think the ATL has MSP beat!!

 

[DrewBlows]

You also have Best Buy, Target, 3M, Pillsbury, Carlson, United Healthcare and others... The hub would remain - you might lose a few hundred management positions. I'm sure DAL/NWA would provide something else in return.

Yeah, $245 million.

 

[andyd]

If it merges with larger Delta and moves its headquarters to Delta's home in Atlanta, Northwest may have to repay $245 million in outstanding debt on bonds that Minnesota's Metropolitan Airports Commission issued on Northwest's behalf.
It also may have to give up $200 million a year in savings, stemming from a renegotiated lease agreement in Minneapolis.



I say we call thier bluff: If they insist on the New Delta picking up the $445 million tab for moving the HQ to Atl....then screw 'em....CLOSE the MSP hub. See how the politicians like that! It's time for DAL managment to have a "come to jesus meeting" behind closed doors and let them know where the Bear Sh!ts in the woods.

 

[AA717driver]

It's time for DAL managment to have a "come to jesus meeting" behind closed doors and let them know where the Bear Sh!ts in the woods.

I think the biggest bear $h!ts in the woods near Narita...TC

 

[jke406]

I think the biggest bear $h!ts in the woods near Narita...TC

Maybe...but another large bear is going to take a huge sh!t all over NWA (and it's precious MN operations) if it doesn't merge with someone soon.

 

[DrewBlows]

I say we call thier bluff: If they insist on the New Delta picking up the $445 million tab for moving the HQ to Atl....then screw 'em....CLOSE the MSP hub. See how the politicians like that! It's time for DAL managment to have a "come to jesus meeting" behind closed doors and let them know where the Bear Sh!ts in the woods.

Good idea, cut the nose off to spite the face and take away any possibility that a merged company can make a profit.

 

[johnsonrod]

If it merges with larger Delta and moves its headquarters to Delta's home in Atlanta, Northwest may have to repay $245 million in outstanding debt on bonds that Minnesota's Metropolitan Airports Commission issued on Northwest's behalf.
It also may have to give up $200 million a year in savings, stemming from a renegotiated lease agreement in Minneapolis.



I say we call thier bluff: If they insist on the New Delta picking up the $445 million tab for moving the HQ to Atl....then screw 'em....CLOSE the MSP hub. See how the politicians like that! It's time for DAL managment to have a "come to jesus meeting" behind closed doors and let them know where the Bear Sh!ts in the woods.

I absolutely agree with this. Threaten to reduce mainline service and increase CRJ/Saab 340 service out of blustery MSP. We are only talking 100-200 managment jobs total...

 

[400A]

Yeah, $245 million.

A one time hit of that amount might be cheap compared to 200 management salaries/bennies over an extended period.

Or they could just give them the old DC-9's as payment :laugh:.

 

[Superpilot92]

Maybe...but another large bear is going to take a huge sh!t all over NWA (and it's precious MN operations) if it doesn't merge with someone soon.

ORLY?? How so? Enlighten us

 

[FDJ2]

Good idea, cut the nose off to spite the face and take away any possibility that a merged company can make a profit.

I'm sorry, but a MSP hub isn't what this merger is about. It's about broadening network reach. Passengers can just as easily be moved through another hub.

The local politicians up at MSP will realize that do what it takes to keep MSP as a hub.

These issues will be worked out if it comes to that and MSP will do what it takes to make itself attractive as a hub.

 

[crjdxr]

I find that "pornolizing" these articles prior to reading makes them much more entertaining and, in some cases, more informative.

 

[DrewBlows]

I'm sorry, but a MSP hub isn't what this merger is about. It's about broadening network reach. Passengers can just as easily be moved through another hub.

The local politicians up at MSP will realize that do what it takes to keep MSP as a hub.

These issues will be worked out if it comes to that and MSP will do what it takes to make itself attractive as a hub.

If Delta abandoned MSP after a merger someone else would move in (read: LCC). The passengers could be routed elsewhere but yields would undoubtedly drop due to longer segment lengths (more fuel burned) and lower fares due to increased competition. It wouldn't take long to lose way more than $245 million.

It is arrogant to think that Delta doesn't need MSP. On the other hand, Minnesota is better served with a large network carrier using MSP as a hub. In other words they need each other. I'm sure there is middle ground to be found. Perhaps keeping some kind of presence at the current headquarters or a smaller penalty for leaving.