Delta-NWA merger moves ahead while state leaders weigh the impact of consolidationby Tim Pugmire, Minnesota Public Radio
Delta Air Lines's board of directors is reportedly set to meet today or tomorrow to approve a merger with Eagan-based Northwest Airlines. The Northwest board may meet as well.
The anticipated move, and its potential economic impact on Minnesota, is raising concerns at the Capitol. Gov. Tim Pawlenty and legislative leaders announced Monday that they will stand united to keep the merged airline's jobs and operations from leaving the state.
St. Paul, Minn. — Northwest Airlines employs nearly 12,000 people in Minnesota, including more than 1,000 at its Eagan headquarters. There's a reservation center in Chisholm, in addition to dozens of suppliers at or near at the Minneapolis-St. Paul International Airport.
With a merger between Northwest and Delta Airlines looking more and more likely, Gov. Tim Pawlenty stood with DFL and Republican legislative leaders and emphasized the importance of those jobs. Pawlenty said the state might oppose the merger, but it's too soon to tell.
"We will need to see what kind of arrangements or what kind of offer they're going to make to Minnesota or what kind of commitments they'll make to Minnesota," Gov. Pawlenty said. "So, it's difficult to respond until we actually see the deal. But you can put me down until then as concerned, very concerned about how this might impact Minnesota."
Gov. Pawlenty is specifically concerned about officials with the merged airline living up to Northwest's previous agreements with the Metropolitan Airports Commission. The airline pledged to maintain its hub operations and headquarters in Minnesota in exchange for loans and lease concessions totaling $445 million. DFL House Speaker Margaret Anderson Kelliher of Minneapolis said she also wants assurances from airline officials that they'll maintain regional air service throughout Minnesota.
"It's very important to Rochester. It's very important all around the state that we make sure that whatever may come here that folks have access to that rural air service. So, that's one of the concerns that we're thinking about," said Kelliher.
The cautious remarks from Kelliher and Pawlenty contrast sharply with the recent comments of another Minnesota politician. Congressman James Oberstar, the powerful chairman of the transportation committee in the U.S. House, is an outspoken opponent of the Northwest-Delta merger. Oberstar maintains the deal would result in fewer flights, fewer jobs and higher fares.
Art Rolnick, Sr. Vice President and Director of Research at the Federal Reserve Bank in Minneapolis, is also predicting job losses from a Northwest-Delta merger. But he said Minnesota's economy should rebound over time. Rolnick said the merger could benefit consumers, if policy makers take the initiative to try and open up the Twin Cities airport to low-cost carriers.
"I think what the politicians are worrying about right now is simply losing Northwest Airlines, and there isn't much they can do about it anyway. But there is something they can do about making sure we have a competitive airport," said Rolnick.
Gov. Pawlenty is also considering a potential upside of the merger. With many businesses expanding their global reach, Pawlenty said a Northwest-Delta consolidation could be a benefit to Minnesota.
"If a merger were to go forward, Minnesota would be the home to the world's largest airline," Gov. Pawlenty said. "And there are new connections and doors that would be open for the traveling public to other parts of the world in other ways that don't currently exist or don't exist at the same level that could be the case if there merger would go forward."
Pawlenty said airlines officials are limited in what they can say about the ongoing merger talks. But he's shared his concerns several times with Delta CEO Richard Anderson and Northwest CEO Doug Steenland.
Pawlenty said he's prepared to cancel a scheduled trip to Las Vegas today if there are any new developments.
- Morning Edition, 02/19/2008, 7:20 a.m.