Merger

The Delta - Northwest merger appears imminent. While I hate to see a headquarters leave the Twin Cities for one of our competitor regions, maybe there is a silver lining. Northwest has been an erratic employer in the past decade. We all know someone who has been laid off, furloughed, or decided to leave because the pay was squeezed and the future was too uncertain. I am empathic toward the plight of Northwest employees, but lets weigh how much we need to fight and spend to keep a legacy airline headquarters in town.

First, let me clarify that the hub and the headquarters are two different things. The Twin Cities needs a hub for business reasons. Having a hub plays into company decisions on where to locate their operation, hold company meetings and conferences, or increasingly with the creative economy on where to allow its workers to live. Denver and San Francisco are two cities that don't house an airline headquarters but are closely identified with their United hubs. Minneapolis needs to be a key Delta hub for decades to come.

On to the money: If this merger happens, the State of Minnesota is due approximately $445 million in immediate loan repayments and forfeiture of future concession discounts. That, at this point, is the only leverage we have left. We can use that leverage to ensure that some high paying jobs are left in the region, that Delta continue to participate in local philanthropy, or even push for a dual headquarters. But I think I have a better idea.

The State of Minnesota should let the merger occur and use the $445 million to create a recurring revenue stream dedicated to developing and enabling private sector businesses which will carry the state deep into the new century. If invested, that amount of money could generate over $20 million per year which could help attract innovative knowledge businesses in creative fields such as medical technology, bioscience, environmental technology, and others. Those sectors would create desirable jobs which would be around for decades and help the region remain economically vibrant for generations.

Bolstering our medical technology success and attracting more biotech and environmental engineering businesses, in addition to other creative economy businesses, would do more to ensure an airline wants to keep a hub here (voluntarily) than any legislative actions could.

It is unfortunate that a merger is the most likely conclusion to the long Northwest saga, but the State should take this opportunity to energize our private sector economy for the next 50 years, not try to prolong an industry that is fraught with fundamental operating issues. Northwest was a 1900's company. We now have the opportunity to reinvest in companies that are perfect for the new century.