Northwest Balks at Hub Pledge to Get $240 Million from Twin Cities

Jan. 17 -- A Metropolitan Airports Commission plan to provide $240 million in subsidies to Northwest Airlines has hit a snag as the carrier faces a new demand to provide assurances it will keep its hub and headquarters in the Twin Cities.

The MAC, which runs the Minneapolis-St. Paul International Airport, on Tuesday postponed a vote on the aid package, saying it needed more time to continue discussions with Eagan-based Northwest about Northwest's commitment to the Twin Cities. The carrier said it was disappointed on Tuesday after more than a year of negotiations with the MAC.

Northwest reportedly has held talks with Delta Air Lines about a possible merger, one of a handful of scenarios pointing toward consolidation in the airline industry. Both Northwest and Delta are operating in bankruptcy protection.

Both have declined comment on reports of talks.

The MAC package includes reduced airport fees and shared airport concession revenue. It requires Northwest to continue making payments on $290 million it owes on a MAC loan. It also would provide about $39 million in benefits to other airlines at the airport through 2020. Terms of the deal would take effect when Northwest emerges from bankruptcy, which it plans to do by early summer.

The MAC voted to revise the hub and headquarters conditions of the agreement so Northwest or a "successor entity" would not receive airport concession revenue or its Building B and C rent reductions if it falls below an average of 226 daily departing flights for planes with 70 seats or more.

Jim Greenwald, Northwest's vice president of facilities and airport affairs, said at Tuesday's meeting that the airline could not sign a revised agreement that included headquarters and lease conditions.

The MAC also voted to stipulate in the agreement that Northwest won't oppose its efforts to settle noise lawsuits in Hennepin County District Court or the MAC's use of passenger facility charges to fund a noise-mitigation program. The MAC faces a class-action lawsuit by area homeowners and a separate suit brought by the cities of Minneapolis, Richfield, Eagan and Bloomington. Both suits claim the MAC hasn't fully delivered on promises to insulate residents from airport noise.

Minneapolis Mayor R.T. Rybak said Tuesday that if the MAC can spend millions of dollars to help airlines, it should be able to meet promises made to residents about noise mitigation.

"You have a track record of not following through (on behalf) of homeowners," Rybak told commissioners. "Fix that."

Copyright (c) 2007, Pioneer Press.



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