Merger foes in Twin Cities not giving up without fight


The Atlanta Journal-Constitution
Published on: 04/16/08

Eagan, Minnesota — Twin Cities political, union and business leaders vowed Tuesday to fight, or at least slow, the proposed Delta-Northwest merger unless executives at the world's largest airline guarantee jobs won't be cut, paychecks don't shrink and flights won't disappear from Minneapolis-St. Paul International Airport.

But promises, like details, weren't forthcoming from Doug Steenland, Northwest's current CEO, who nonetheless tried to assuage the economic fears of Northwest workers and Minnesotans alike during a press conference at the airline's headquarters here.

Kiichiro Sato/AP
Northwest crew members head to a plane Tuesday as unions representing them opposed the deal.
 
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Unbowed, merger opponents laid out their deal-killing strategy. A powerful state legislator requested a special session of the General Assembly to "try to do what we can to limit the harm of this merger." House Republicans offered tax breaks to entice Delta to move its headquarters from Atlanta to Minnesota.

Gov. Tim Pawlenty said a job-paring merger might force the new Delta to immediately repay $245 million in bonds backed by the state for Northwest. And Northwest's major unions, which represent pilots, mechanics and baggage handlers, pledged to rally their members, federal regulators and elected officials in Washington to thwart "this ill-advised mega venture," as one union leader put it.

Hanging over the tough talk, though, was the sad realization that an 82-year-old corporate king was relinquishing his throne to an unwelcome Southern prince. Northwest's planes, with their distinctive "red tails," will no longer fill Twin Cities skies. An era, and an icon, is disappearing.

"It is certainly a blow to be losing such a prominent Fortune 500 company," said Todd Klingel, president of the Minneapolis Regional Chamber of Commerce. "But it's been expected for so long. Let's get on with it. The key is what can we do to minimize the loss to Minnesota."

Steenland and other executives wouldn't detail the merger's impact on Minnesota, where Northwest employs 11,500 people and pumps nearly $13 billion annually into the economy. Some — perhaps all at some point — of the 1,050 managerial and administrative jobs may be subsumed by the merged company's Atlanta headquarters. The name "Northwest," on planes and terminals, will be covered in paint. Delta executives will control the merged airline's board and Steenland will be relegated to a seat on Delta's board.

Still, Northwest executives put on happy merger faces for Minnesotans on Tuesday. Steenland said Northwest corporate employees will maintain a "significant" and "meaningful" presence in the combined airline, though he declined specifics.

"It's premature to do that [because] the transition plan has not been developed yet," he said during a half-hour press conference in the company's boardroom. "I see a lot of expertise on the Northwest side today that's located in the Twin Cities. We will continue using their skills and talents in a merged airline."

Northwest's baggage handlers, reservation clerks, engine mechanics and others — but not pilots — will receive a 4 percent equity stake in the new company. And the airport, with its 466 daily departures by Northwest, "will continue to be one of the combined airline's premier hubs," the merged company's new Web site (www.newglobalairline.com) proclaimed.

Joe Dwyer, who runs a small printing business in Eagan, worries that job losses will exacerbate an already hurting economy, especially if more for-sale signs dot front lawns. Yet he supports the proposed merger.

"I can't help but think that the deal keeps both airlines more viable together than they would be independently," he said. "In the long run that's probably good for the Twin Cities."

The unions weren't buying the less-is-more rationale. Dave Stevens, president of Northwest's pilots union, told his members that the merger "is a recipe for failure. Under these conditions, Northwest Airlines and all the stakeholders, including the pilots, other employees and customers, are better served by a stand-alone airline."

He was particularly irked by the deal Delta's pilots brokered with management that allowed the merger to go forward. Delta pilots agreed last week to take a 3.5 percent equity stake in the new company.

"Delta pilot leadership and Delta management have made an arrangement to try to disadvantage the Northwest pilots economically and with respect to our seniority," Stevens wrote. "No pilot group is going to put up with this."

Steeland said Northwest gave its "best efforts" to try and resolve the impasse with pilots, entering negotiations with Stevens weeks ago.

"We'd like to be able to build on that progress and close that gap," said Steenland, adding that at least another six months remains before the feds sign off on the merger - time enough for the pilots to climb on board.

Meanwhile, Gov. Pawlenty dismissed legislators' efforts to lure Delta's headquarters to Minnesota. The chamber's Klingel too fears it's too late to save the headquarters. But he vows to learn from the Twin Cities' loss. Each year the chamber visits another city to see what works, what doesn't.

This year's destination?

"Atlanta," Klingel said. "I'm sure Richard Anderson will want to host us."

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