State officials wait for word of mergerby Tim Pugmire, Minnesota Public Radio
The possibility of a merger led Gov. Tim Pawlenty to cancel an out-of-state trip. Legislators also scheduled a hearing Monday to learn more about a merger deal that they expect will be public by then.
St. Paul, Minn. — Pawlenty was scheduled to travel to Las Vegas to address an international renewable fuels conference. But Pawlenty called off the trip at the last minute because of the ongoing talk of a merger between Northwest and Delta. Spokesman Brian McClung said the governor wanted to be nearby in case of an announcement.
"Job one is to protect Minnesota's interests and work to keep Northwest's hub and headquarters in our state, as they have previously committed to," he said. "So, we want to be ready to fully act and work if need be on any of those issues."
Neither the Republican governor nor his commissioners know what a merger between Northwest and Delta will look like. And they say it's too soon to talk about how the state might respond to the deal.
Commissioner Dan McElroy of the Department of Employment and Economic Development said there have been some discussions with the Metropolitan Airports Commission about the possibility of incentives, but he declined to elaborate.
There's also the matter of Northwest's previous commitments. McElroy said Northwest agreed to keep its hub and headquarters in the state in exchange for nearly $450 million in loans and airport lease concessions.
"Four-hundred-and-fifty million dollars is a lot of money," he said. "I don't know what the face value of this merger is going to be. But if it were $10 billion, that's about a 5 percent penalty for not staying in Minneapolis-St. Paul. That's not chump change. So, we think that's a place to start, and then we'll probably have some other discussions."
Northwest's Minnesota workforce is nearly 12,000, including more than 1,000 employees at its Eagan headquarters. Delta's offices are in Atlanta. And that's where most observers believe the merged airline will be based. Still, McElroy said he's been preparing to talk with airline officials and make a case for Minnesota.
"This is a better place to run a big business than Atlanta," he said. "We rank number one in the country according to Marketwatch.com as the best place to run a major company. We lead the nation in Fortune 500 and Fortune 1,000 companies per capita. We have more Fortune 500 companies here than Atlanta does. We have physical space. We'll have a great story to tell."
Legislative leaders are hesitant to offer solutions when they don't know if they're facing merger problems.
Sen. Tom Bakk, DFL-Cook, who chairs the Senate Taes Committe said he expects lawmakers will eventually be talking about tax breaks and other incentives aimed at making sure the merged airline keeps jobs and operations in Minnesota.
"You know, that's not new for the Legislature," he said. "I mean the state made a huge commitment to Northwest Airlines when they were struggling, hundreds of millions of dollars. And they're not struggling anymore. And I think they owe something to the people of the state of Minnesota for the commitment that we've made to them previously. And it starts with a good dialogue about what's the economic impact to Minnesota going to be from this merger."
The Senate Business, Industry and Jobs committee has scheduled a hearing Monday to question airline officials about the merger impact. The House Local Government and Metropolitan Affairs Committee will also meet that day to discuss how a merger would affect the Metropolitan Airports Commission.
- All Things Considered, 02/19/2008, 5:24 p.m.