Delta-Northwest face pressure from Minnesota

By Chris Reiter

NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N: Quote, Profile, Research, Stock Buzz) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research, Stock Buzz), still trying to win backing for a merger from their pilots, face another hurdle in their effort to create the world's largest airline.

Before exiting bankruptcy last year, Northwest agreed to maintain a hub and headquarters in Minnesota in exchange for $445 million in loans and lease concessions at its Minneapolis operations.

If it merges with larger Delta and moves its headquarters to Delta's home in Atlanta, Northwest may have to repay $245 million in outstanding debt on bonds that Minnesota's Metropolitan Airports Commission issued on Northwest's behalf.

It also may have to give up $200 million a year in savings, stemming from a renegotiated lease agreement in Minneapolis.

"There has not been a resolution," said Patrick Hogan, a spokesman for the Metropolitan Airports Commission. "They have a legal commitment to this state, and we expect them to uphold it."

The potential Northwest-Delta merger has drawn attention of politicians and lawmakers. Minnesota Governor Tim Pawlenty wrote to the chief executives of both airlines saying, "We trust and expect these commitments to be honored.

He also offered "additional commitments" to Delta and Northwest to maintain the headquarters and full operations in his state.

The airlines are not in a rush to resolve the issue before agreeing on a merger.