Delta to pay off $175M in Minnesota debt

AP News
Posted: Jun 08, 2011 9:12 PM
Delta to pay off $175M in Minnesota debt

Because it is closing facilities in Minnesota, Delta Air Lines Inc. will have to repay $175 million in government-backed loans earlier than planned in order to get out of commitments tied to a long-ago bailout of Northwest Airlines.

The agency that runs Minneapolis-St. Paul International Airport said on Wednesday that Delta must pay off the loan. Its announcement came after Delta said it plans to close training centers for pilots and flight attendants in Minnesota, where Northwest was based, to save money.

Northwest got state help when it ran into trouble in the early 1990s. In exchange for government-backed loans it made promises that included keeping its headquarters here. That agreement has been renegotiated, most recently after Delta bought Northwest in 2008 and closed the headquarters in Eagan.

The loan was due to be repaid by 2016. Patrick Hogan, a spokesman for the Metropolitan Airports Commission, said the agency expects Delta will now pay off the loan around the beginning of 2012.

Delta's Minnesota closures will begin this year and continue through 2012, Delta said in a memo to employees on Tuesday.

Delta has made a priority of paying down debt in recent months, and it plans to trim the amount of flying it does beginning in September as it copes with sharply higher fuel prices.

Paying off the loan will close out the last of its commitments tied directly to the state help. However, Delta still must keep at least 360 daily departures from the Minneapolis airport, Hogan said. Delta says it has more than 480 average daily departures.

Minnesota is in a budget crunch but the proceeds from paying off the loan will go to bondholders.