Includes Job Guarantees, Early Bond Repayment
The Metropolitan Airports Commission (MAC) voted in favor Monday
of an agreement with Delta Air Lines, committing the airline to
maintain 10,000 Minnesota jobs and 400 daily departures from its
Minneapolis-St. Paul hub.
Delta CEO Richard Anderson called the agreement a win for all
parties involved. "I want to commend the MAC and the leadership of
Jeff Hamiel and Jack Lanners for approving an agreement that we
believe is good for the State of Minnesota, the traveling public
and our employees who live here," Anderson said. "This agreement
solidifies our commitment to Minnesota and continues to build upon
a long-standing relationship that Northwest, and now Delta will
have with the state moving forward."
Anderson added, "I also want to thank Governor Pawlenty, and
members of the state legislature from both parties, for their
leadership in crafting an agreement that protects jobs and air
service for the people Minnesota."
The new
agreement is part of renegotiated repayment terms for approximately
$245 million on bonds that the MAC issued for Northwest Airlines'
use in 1992. Northwest is now a wholly owned subsidiary of Delta
and, at issue, is a requirement that Northwest maintain a corporate
headquarters in Minnesota.
As ANN reported, commissioners rejected an
earlier agreement with Delta that would have forced the airline to
repay those bonds immediately... as with the merger, Northwest's de
facto headquarters is now in Atlanta.
In exchange for relief from the repayment clause, Delta agreed
to increase its daily flight commitments from 187 in the original
agreement to 400; to shorten the bond repayment period to 2016 from
2022; and to go beyond the original bond covenants and specific job
functions that will stay in Minnesota as part of the 10,000 jobs
commitment, including pilot and flight attendant bases;
reservations centers in Chisholm and the Twin Cities; the pilot
training center and technology center in Eagan; and the
headquarters of Mesaba Airlines.
In addition, Delta committed to place other well-paid airline
management functions in Minnesota, including the Delta North
headquarters; the new headquarters for management of Delta's
regional airlines (Delta Connection); and to relocate the Compass
Airlines headquarters from Virginia to Minnesota.
Delta notes Northwest's outstanding obligations to the MAC are
collateralized by assets valued at 140 percent of the amounts
owed... so there was little or no risk to the state or the MAC for
amending the covenants and extending the existing agreement.
Repayment of the $245 million in outstanding obligations goes
directly to the bondholders, not the state, MAC or Minnesota
taxpayers.
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