ST. PAUL -- Gov. Arne Carlson of Minnesota met Wednesday with Gary Wilson, co-chairman of Northwest Airlines, to "reopen the lines of communication" regarding a possible $740 million bond-financed loan to the airline to fund a major expansion of its operations in the state.

Both the state and the Metropolitan Airports Commission, which owns and operates the Minneapolis/St. Paul International Airport, have been considering jointly financing the loan by issuing general obligation and revenue bonds.

But on Monday, Northwest broke off talks when the airlines commission said it would only issue $270 million of bonds for its share of the loan, not the $390 million requested by the airline.

The state has been considering issuing $350 million of bonds to cover its portion. Northwest planned to use that money to build an airplane maintenance facility in Duluth and an engine repair facilitiy in Hibbing, while the $390 million loan from the airports commission would have gone to undetermined future expansion, according to Christy DeJoy, an airline spokeswoman.

The meeting between Gov. Carlson and Mr. Wilson was held in Washington at the request of Rep. James Oberst, D-Minn. The two maintenance facilities were to be built in Rep. Oberstar's district.

"We just wanted to reopen the lines of communication," the governor said during an interview Wednesday after he returned to the state capital. "They are now open. We did not renegotiate the package or ask them to renegotiate."

He said no additional talks are scheduled. The governor also would not say if he is willing to increase the state's share of the loan to revive the deal. Such a change would require approval of the state Legislature, the governor said. The $350 million of state bond financing received preliminary approval from the lawmakers in May. Final approval for issuing any of the bonds had not been given at the time negotiations broke off.

Lynn Richardson, airports commission deputy executive director, said the commission lowered its offer to Northwest because an accountant's study showed that issuing the full $390 million would have unacceptably reduced coverage on the commission's outstanding bonds and possibly jeopardize the commission's ability later on to issue bonds for improvements at Minneapolis/St. Paul International Airport.

Mr. Richardson said yesterday that the commission had not changed its position and had not been in contact with Northwest since Monday.

The commission's $154 million of outstanding GO debt is rated triple-A by both Moody's Investors Service and Standard & Poor's Corp.

Ms. DeJoy said Northwest would be willing to reconsider the Minnesota offer if it was for the full $740 million, but added the airline is exploring other options. She also denied a published report that said Northwest was planning to use the loan from the airports commission to fund operations at recenlty acquired Midway Airlines. A federal bankruptcy court judge last week appoved Northwest's $174.7 million purchase of the bankrupt Chicago-based airline.

"It would not have been a wise decision to count on money you had not received for a purchase like that," she said.

Ms. DeJoy added that Northwest is still studying a possible $1 billion expansion of its operations at Detroit Metropolitan Wayne County Airport, but that the Minnesota loan also had no bearing on that potential project.

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