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.

FMI: www.delta.com, www.mspairport.com/MAC