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Delta prez careful, conciliatory in latest Capitol hearings on Northwest

In what was at least the third round of hearings at the Capitol regarding the Delta-Northwest Airlines merger, Delta President and CFO Ed Bastian came to St. Paul from Atlanta this morning. His appearance was a noble, if symbolic, gesture.
He made careful opening statements to the House Commerce and Labor Committee and to the Senate’s Business, Industry and Jobs Committee. He respectfully answered lawmakers’ questions — though both meetings clocked in under an hour.

But the upshot, like in other hearings on the matter, is this: The Legislature can’t do much about the merger, and the fate of $245 million in bonds Northwest owes the state is unclear.

Still, Bastian, in horn-rimmed glasses and a dark blue suit, was conciliatory. “I empathize,” he told House members about the uncertainty the merger will bring. “Words mean little; it’s action.”

This sort of refrain brought several lawmakers to comment, in the words of Rep. Leon Lillie, DFL-North St. Paul, “I hope you mean what you’re saying.” Lillie works for Northwest.

Bastian had to dance around some issues, especially since the merged company doesn’t, as he said, want to lose the bond arrangement. He emphasized that jobs and the hub would not be lost, even though the headquarters would be in Atlanta rather than Eagan.

“Delta and Northwest are committed to making this merger seamless and problem-free,” Bastian said. He also reiterated the notion that no “frontline” jobs — baggage handlers, flight attendants, pilots — would be “voluntarily” eliminated from Minneapolis-St. Paul. He even quoted a recent Star Tribune editorial that said Northwest is as much a part of Minnesota as our lakes, winters and hockey.

In short, he played nice.

Which is something Sen. Geoff Michel, a Republican from Edina, urged his fellow lawmakers to do at a Capitol press conference Friday, saying that Delta could likely become a major employer in the state. “Let’s not kick them as they come in,” he said Friday.

By Monday morning, Michel demonstrated that he was at least willing to hold Bastien’s feet to the fire, even as he sounded a note of resignation himself. “This decision is beyond the Minnesota state Senate,” Michel offered, before pressing Bastien on a timeline for when the merger will be completed. (Answer: still some six to eight months; everyone’s looking toward the end of the year.)

Bastien told both committees that fuel prices have put the airline industry in peril (Delta will pay about $1.5 billion in gas this year alone) and that two airlines operating as one, rather than two individual companies, would better withstand the economic crunch. He also declared that Northwest hubs here, in Memphis and Detroit, and a Delta one in Cincinnati, would remain intact.

“This is a merger of addition, not of subtraction,” he said.

In fact, Bastien answered many questions with “absolutely,” to the degree that a lawmaker or taxpayer might get a little suspicious.

“We’re going to keep the best and brightest,” Bastien said in a bit of equivocation. “Without  question, some will work here. Without question, some will be down in Atlanta.” Figuring the number of jobs remaining in the state “would be premature.”

As far as that $245 million, Bastien noted that the company would have “$7 billion in liquidity” should the airline be forced to pay it off all at once. But lawmakers seemed disinclined to press the issue, so as to not rattle any cages.

Ultimately, Bastien told both committees that he “looked forward to working with you,” and that he would keep lawmakers “apprised.”

“Welcome to Minnesota,” Sen. James Metzen, the Senate committee chair, said in conclusion, sounding less than pacified. “It always comes down to one issue: jobs.”

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Comments (1)

  1. Submitted by Paul Schatz on 05/07/2008 - 12:23 pm.

    The only people less qualified to run a business than airline executives are legislators.

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