Lawmakers demand NWA, Delta fulfill commitment to state taxpayers

By State Senator Scott Dibble, State Representative Frank Hornstein, and State Representative Michael Paymar

April 15, 2008

Three lawmakers are pushing a bill to require Northwest Airlines and Delta Airlines to uphold NWA's commitment to state taxpayers upon the companies' merger.

Transit subcommittee Chairs State Senator Scott Dibble and State Representative Frank Hornstein (DFL-Minneapolis) and State Representative Michael Paymar (DFL-St. Paul) have authored a bill that will require the airlines to repay all bond obligations and rent reductions previously granted by the Minnesota Legislature.

"Given last night's news that this merger will move forward, we are renewing our call for the Legislature to take action on ensuring Minnesota, our taxpayers, and Northwest's employees are not forgotten," Rep. Hornstein said. "Mergers benefit stockholders. We are making sure airline consumers, employees and taxpayers are acknowledged in this deal."

Senate File 3746/House File 4015 would require NWA to repay financial benefits it has received from the Legislature if it does not live up to its previous commitments. Specifically, this would include about $240 million in rate reductions on its lease and loan obligations that have been renegotiated several times over the years.

"Throughout the years, the people of Minnesota have been extremely generous to Northwest Airlines, providing them with many financial incentives to support its business," Sen. Dibble said. "The state lent this money in good faith. In return for Minnesota taxpayers' support, the airline made many promises, including a commitment to remain in Minnesota and retain jobs. These promises can't be abandoned in light of the merger."

Sen. Dibble added that aside from NWA's commitment to maintain hub status, corporate headquarters and most of its workforce in Minnesota, the airline also made other unfulfilled promises during the 1992 and 1994 loan deals. It agreed to create a reservations center in Chisolm, create a minimum of 500 jobs at the Hibbing Engine Facility, and develop three hangars and at least 1,000 jobs at the Duluth base. NWA back tracked on these assurances.

"This is one promise we are not going to let NWA escape from," Rep. Paymar said. "Especially in this economic climate, it's imperative that we ensure our state's taxpayers, airline consumers and Northwest employees are protected. We are going to be working to get a full committee hearing and floor action on this bill before the end of the 2008 legislative session."

The three lawmakers highlighted some of the other benefits the Legislature has extended to the airline in the past. Those include:

• $109 million Metropolitan Airport Commission construction program for NWA
• Large loan and financing package granted in 1992; renegotiated in 1994
• $4 million exemption from corporate franchise tax, 1995
• $2.5 million tax break on leased airplanes, 1996
• Elimination of a larger airport that would have allowed more competition, 1996
• Extension of NWA's exemption from the petroleum tank release clean-up fee, renewed in 2008 Tax Bill, SF 3201