CHICAGO -- A key Minnesota government panel yesterday approved the issuance of up to $349 million of bonds to assist Northwest Airlines in expanding its operations in the state.
The Metropolitan Airports Commission -- owner and operator of Minneapolis/St. Paul International Airport -- approved its share of a $699 million financing package for the airline on a 10-to-4 vote, according to Commission Secretary Lynn Sorensen.
Two other government panels -- the Iron Range Resource and Rehabilitation Board and the Legislature's Commission on Planning and Fiscal Policy -- still must approve the commission's bond issue. Those boards are expected to vote on the matter within the next 10 days.
Minnesota officials have said there is little doubt the Iron Range board and the legislative commission will approve the bond deal.
Minnesota would issue the remaining $350 million of bonds.
Only Gov. Arne Carlson is required to approve the issuance of the state bonds, and he had said he will do so.
Under a tentative agreement reached between Northwest and the state on Nov. 11, the state would issue up to $350 million of general obligation bonds and lease-backed revenue bonds to fund the construction of an airplane maintenance facility in Duluth and an engine repair facility in Hibbing. The airports commission would issue up to 349 million of GO and lease-backed revenue bonds to fund future expansion by Northwest.
Meanwhile, U.S. Sen. Alan Dixon, D-Ill., has asked the U.S. Department of Transportation to investigate whether Northwest backed out of a planned purchase of Midway Airlines in order to preserve the proposed Minnesota bond package.
On Nov. 13, Northwest withdrew a $174.7 million offer to buy the bankrupt Chicago-based airlines, charging that Midway had supplied false information on its revenues and assets, according to Jim Faulkner, a Northwest spokesman. Midway officials have denied the allegation.
Only two days before withdrawing its Midway bid, Northwest struck a tentative deal with Minnesota officals for a bond package that would finance maintenance facilities in the state for the airline.
Sen. Dixon on Monday wrote a letter to Transportation Secretary Samuel Skinner asking him to determine if the two events were related.
"As I understand it, other reasons may be behind Northwest's withdrawal, including the state of Minnesota's approval of a package of financial assistance" to Northwest, the senator wrote.
Published reports last week had quoted some airline analysts as speculating that Northwest withdrew from the Midway deal under pressure from Minnesota officials who were concerned about Northwest's ability to make lease payments to service the bonds.
State Finance Commissioner John Gunyou, the state's lead negotiator on the Northwest deal, categorically denied that any Minnesota officials had sought to dissuade Northwest from buying Midway.
"The terms and conditions of our proposal do not allow us to run the airline," Mr. Gunyou said.
He added that Northwest's Midway offer appeared to him to be a "real bargain" and would have strengthened the airline if it could have been completed.
Bill Mosely, a spokesman for the transportation department, said Sen. Dixon's request is under consideration.
"We will respond to Sen. Dixon's letter, but at this point, we're still reviewing what we should or could do," he said.
Midway was forced to shut down the day after Northwest withdrew its bid for the airline.
