Amid NRA-Delta tax break fight, others woo airline’s headquarters

Delta’s headquarters. JOHN SPINK / AJC File photo

Delta’s headquarters. JOHN SPINK / AJC File photo

As Georgia legislators halted plans for a tax break for Delta Air Lines over the carrier's end of an NRA discount, New York's lieutenant governor, Birmingham's mayor and others from around the country swooped in to suggest the airline move its headquarters to their area.

The political battle that has emerged from a gun control debate sparked by the Florida school shooting is leading politicians to draw lines in the sand, supporting the NRA or standing in opposition — while some companies try to play hopscotch.

For Delta, the sparks began flying late last week when it was listed as one of the companies that partnered with the National Rifle Association, drawing scrutiny. On Saturday, Delta said it would discontinue its discount for NRA members flying to the gun group’s convention, joining other companies cutting ties with the group.

Atlanta-based Delta, for its part, said it was trying to "refrain from entering this debate and focus on its business." Conservative legislators saw the move as anything but.

And for Delta, it was bad timing. The company was in the middle of trying to get a $50 million airline jet fuel tax break reinstated by the Republican-controlled Georgia legislature. By Monday, Lt. Gov Casey Cagle, a Republican gubernatorial candidate, had pledged to "kill any tax legislation" that benefits Delta unless the airline reinstates its relationship with the NRA.

That caught the attention of competitive-minded Democratic politicians in other cities and states pining for their own airline.

New York Lt. Gov. Kathy Hochul tweeted to Delta that she “admires your principled stance,” adding that she is “one of your most frequent flyers.”

“Let’s continue our great relationship…. move HQ to where you’re appreciated?” Hochul tweeted.

It’s not that far-fetched an idea: Delta has two hubs in New York City, has intently focused on building its market share there and holds its annual shareholder meeting in Manhattan.

But Delta’s largest hub by a long-shot is at Hartsfield-Jackson International Airport, the company has called Atlanta home since 1941 and has more than 33,000 employees in the state.

More importantly, in 2016 Delta signed a 20-year lease in which it committed to keep its headquarters in Atlanta.

The New York lieutenant governor’s chief of staff Jeffrey Lewis called his boss’s tweet “a friendly gesture.”

“It seemed that Lt. Gov. Cagle was highlighting his state in more of a negative light and threatening businesses,” particularly one of the state’s largest employers, Lewis said. “Those are a lot of good paying jobs. We just want to say blatantly that New York state appreciates [Delta] and isn’t going to threaten them over their support for a political interest group that really has no place in the public or financial or economic discourse.”

After New York’s opening, Birmingham’s mayor Randall Woodfin in a tweet noted that Delta and its triangular logo in the shape of the Greek letter represents change — for example, changing headquarters. He added: “Let’s chat.”

Other invitations to Delta came from Virginia and Minneapolis.

U.S. Rep. Tim Ryan, D-Ohio stepped up from tweeting to a more serious overture, writing a letter Tuesday to Delta CEO Ed Bastian inviting the company to relocate its headquarters.

“I am encouraged by the leadership shown by Delta and other companies that have since ended their relationship with the NRA,” Ryan wrote in the letter to Bastian. “No company should be punished or threatened for taking a principled stand in the name of corporate social responsibility.”

Airline analyst Henry Harteveldt said that while other cities may want Delta to move, “I don’t think Delta has any intention of relocating its headquarters.”

“Atlanta is Delta’s historic home for more than 70 years, and I don’t see any business benefit to Delta relocating its headquarters away from the city with its largest hub,” Harteveldt said.

Delta’s headquarters in Atlanta also significantly pre-dates its latest issues with the NRA and the jet fuel tax exemption it is fighting for in Georgia.

The turmoil is over a tax break that Delta first got in 2005 amid financial troubles and hasn't had since 2015, when lawmakers got upset when Delta's then-CEO Richard Anderson pushed for more funding for transportation improvements and supported gay rights in his opposition of so-called religious liberty legislation. Delta reported a $3.6 billion profit for 2017, but says the fuel tax exemption would bring more flying to Georgia.

But even if the enticements from other cities and states are merely symbolic gestures of goodwill, the events highlight a power struggle between politics and business, and raise the potential stakes of one side alienating the other.

“There’s volatile feelings on all sides of this,” said U.S. Rep. Doug Collins, R-Gainesville, in an interview on Fox Business Network on Tuesday. “Delta made a very big miscalculation.”

While Delta may have run afoul of state legislators, the airline’s most direct relationship for its hub and headquarters is not with the Republican-led state, but with the Democrat-led City of Atlanta. Delta’s airport lease agreement including the headquarters covenant is with the city.

A spokesperson for Atlanta Mayor Keisha Lance Bottoms in a written statement said: “The histories of Delta and Atlanta have always been intertwined, our growth mirroring each other’s momentum and success. The City of Atlanta is both grateful and confident that Delta Air Lines will continue to play an essential role in our promising future.”

In its airport lease with the City of Atlanta, Delta agrees to maintain its headquarters in the city of Atlanta or within 15 miles of the airport. If Delta violates the headquarters covenant, it would forfeit its share of revenue sharing from concessions and other sources for the remainder of the lease.

However, that doesn’t prevent the airline from moving jobs, facilities or operations from the headquarters.

Delta isn’t a stranger to putting the value of its presence in Atlanta at stake when negotiating political deals. In 2009, the airline indicated that it could move flights to its other hubs if Hartsfield-Jackson didn’t grant what it was seeking in lease negotiations.

On Tuesday, Gov. Nathan Deal stayed largely quiet about the Delta snub as supporters of the tax break tried to quietly regroup ahead of a key legislative deadline. The candidates running for his job, meanwhile, didn’t get the memo.

State Sen. Hunter Hill became the fifth and final leading GOP contender to speak out against the jet fuel tax break, calling to “eliminate Delta’s sweetheart deal and focus on hardworking Georgia families.”

And Secretary of State Brian Kemp, another contender for governor who had earlier opposed the tax break, said lawmakers should instead adopt a sales tax holiday for guns and ammunition tied to the Fourth of July holiday.

“Now, it’s time for the Georgia Senate to kill the tax break for Delta and replace it with a sales tax holiday that benefits the same 2nd Amendment supporters that Delta - and other corporate cowards - are publicly shaming.”

At a celebration of Georgia’s booming film industry held Tuesday at Capitol, Georgia officials were deluged with questions about whether the Delta backlash could hurt the state’s chances to lure Amazon’s second headquarters to Atlanta.

Pat Wilson, the head of the state’s economic development arm, urged a cautious approach.

“It’s a legislative process. If something happens, we’ll talk about it once it passes the Legislature,” he said. “But right now, we’re going to live in the moment and enjoy the fact that we’re number one in film as well as being the number one place to do business in the United States.”


Delta's action: On Saturday the airline ended a discount for National Rifle Association members.

Georgia's reaction: Lt. Gov. Casey Cagle pledged "to kill any tax legislation" that benefits Delta.

Other responses: Officials from New York, Alabama and Virginia have welcomed Delta to move its headquarters. But Delta is bound by a lease to keep its headquarters in Georgia, although nothing prevents it from moving jobs or operations.