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Thu, May 08, 2008

Delta CFO Tells Minnesota Lawmakers HQ Decision Final

Remains Mum On Merger's Impact On Jobs

Despite much hand-wringing and suggestions of economic incentives, Minnesota lawmakers have not been able to convince a merged Delta and Northwest to keep the combined airline's headquarters in Eagan. Even more frustrating, they haven't been able to find out how many jobs will disappear in the merger... or even find out when they'll find out.

The Associated Press reports Ed Bastian, Delta's president and chief financial officer, told lawmakers in separate state House and Senate hearings that while the headquarters will be in Atlanta, the Minneapolis-St. Paul Airport will remain a hub. He said there will be no involuntary reduction of "front line" Northwest customer service employees.

In response, lawmakers repeatedly -- and unsuccessfully -- pestered Bastian for more details about how many jobs at headquarters would be lost and what other Northwest divisions might be closed entirely. All Bastian would tell them was, "We are early in the process of determining what corporate activities will be combined and how they will be combined. Some of that work will be done in Minnesota, some of that work will be done in Atlanta. We're early in the process."

There's more at stake than the idle curiosity of state legislators. Under financial agreements between Northwest and Minnesota dating to 1992, the carrier could forfeit more than 200-million dollars in bond debt issued by the Metropolitan Airports Commission, and another 200-million in airport rent concessions, if it fails to keep its headquarters, a hub, and a certain minimum number of employees in Minnesota through 2020.

Bastian says the company will negotiate its way out of the headquarters requirement with Governor Tim Pawlenty's office in exchange for maintaining some number of jobs and a hub in the Twin Cities, but says the airline will buy its way out of the deal if necessary. He hinted that if it comes to a buyout, all bets are off.

"I don't know if that's in anyone's best interests at this point," he said.

Steve Gordon, president of the International Association of Machinists union which represents Northwest ground workers, predicted the merger will have a major impact. "I think people need to start realizing this is going to have grave effects on the communities where Northwest employees live," Gordon said. "Not just on the employees -- on the communities."



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