Delta Repays Old NWA State Loan
MINNEAPOLIS (WCCO) — It was a decision that was fraught with controversy when state lawmakers approved it. Back in December 1991, Minnesota agreed to loan Northwest Airlines $761 million to help the struggling carrier fend off bankruptcy.
As part of the package, Northwest would build a maintenance facility in Duluth and a reservation center on the Iron Range. It quickly became known as the Northwest Airlines “bailout.”
But the deal also had a catch — it included covenants that required the airline to guarantee that employment in the state would not fall below 10,000 NWA workers. If it did, that would trigger immediate repayment.
The Metropolitan Airports Commission facilitated the loan and sold the bonds to fund it. General counsel for MAC, Thomas Anderson, says Delta Airlines assumed all obligations when it took control of Northwest in 2008.
Delta has announced it is repaying the total outstanding amount of the loan, $175 million as soon as Wednesday to completely retire its obligation.
“It means their obligations are paid off and we have the airport we have today because of the decisions made back then,” Anderson said.
Delta’s assuming of the loan back in 2008 also obligated it to keep the minimum employment level. While that number currently stands closer to 12,000 Minnesota employees, it has been falling since the merger of the two carriers.
“I think it’s a concern for Delta workers,” says Mary Sansom.
She is the recording secretary for IAMAW Airline Local 1833. A long time Northwest employee, Sansom said there’s a feeling of unease among Delta’s Minnesota workforce. Since the Atlanta based airline took over, the company has moved hundreds of workers out of state to its corporate headquarters in Atlanta. Sansom fears more will leave in the months and years ahead.
“It’s a very scary situation and in this economy, with lots of jobs outsourced, plants closing and moving elsewhere, people can’t get work,” she said.
Still, Delta released a statement saying the loan payment, “does not change Delta’s commitment to Minnesota, the Twin Cities, the MSP Airport or our people and customers living and working in these communities.”
While no longer forced to keep jobs, Delta still has to keep a minimum number of daily flights — at least 360 a day under its airport lease agreement.
“They are still committed to maintaining a hub here, however, I think probably just as important from the point of view is the state’s economic health,” Anderson said.