CHICAGO - The Minnesota Metropolitan Airports Commission will hold a special meeting next week to discuss a tentative agreement that would allow Delta Air Lines Inc. to close its former Northwest Airlines Corp. headquarters in Eagan without triggering the immediate repayment of $245 million of debt.
The revised pact calls for the airline, which acquired Northwest in October, to repay the bonds that mature in 2022 on an accelerated schedule by 2016. Delta also will still remain eligible to receive concession revenues that it would have forfeited under an existing agreement for closing its local headquarters.
The airline will receive $10 million in financing assistance for a maintenance and administration building at the Minneapolis-St. Paul International Airport that would be repaid with rental payments. The airline also agreed to house its regional operations at the airport.
Delta would pay an additional $500,000 in rent through 2014 and then $1 million until 2020. The airline also must guarantee that it will offer 400 departing flights with at least 250 on larger planes and keep at least 10,000 local jobs. The airline currently employs about 11,500 in the region.
"It certainly is not perfect. We would have preferred to keep the headquarters and the same level of jobs, but Delta made it clear that wasn't going to be an option so our goal was to protect as many jobs and air service as possible," said commission spokesman Patrick Hogan.
On the decision to trim six years off the airline's bond repayment schedule, Hogan added: "They are not keeping their entire commitment, so there needs to be some penalty."
The commission was presented with a summary of the deal's terms at a meeting Monday and will hold a special meeting next Tuesday to discuss it with a vote expected at its regular January meeting.
The airline and the commission, which manages the Minneapolis-St. Paul International Airport, had been in negotiations for months over possible revisions to the terms of the commission's loan package to Northwest that included $240 million in financial relief.
Under the agreement, Northwest was obligated to keep its hub at the airport and its headquarters in the region, maintain two maintenance hangars, and continue paying off the remaining $245 million from a $275 million 1992 debt issue.
In the event the airline reneged on its commitment to keep the hub and headquarters, the commission could demand repayment of the bonds that carry its general obligation pledge within the next 12 to 15 months.
Northwest accounted for more than 75% of the 18.1 million passengers that traveled through the Twin Cities airport last year. Northwest's passenger levels dipped in 2005 and 2006 before increasing again in fiscal 2007 as it emerged from bankruptcy.
Delta formally acquired Northwest in October, six months after the union was first announced. The combined companies elevate Delta to the top spot among air carriers internationally, with expected annual revenues of $35 billion and 75,000 employees.
The airline has said it would maintain all of its current hubs, including Northwest's in Minnesota, Detroit, and Memphis, and Delta's in Atlanta, Cincinnati, New York City, and Salt Lake City, though cuts are being made at some airports that have raised questions over their hub status.
The airport has wrapped up most projects under its $3.1 billion capital program for 2010 launched in the late 1990s, including construction of a new runway.
Fitch Ratings and Standard & Poor's rate the airport's nearly $800 million of senior-lien revenue debt AA-minus and $830 million of subordinated debt A. Its GO debt carries top marks. Moody's Investors Service does not rate the commission.