Moe: State's 1991 loan to Northwest could protect against possible merger

ST. PAUL (AP) -- Senate Majority Leader Roger Moe says he believes the state's $838 million in financial aid to Northwest Airlines in 1991 and accompanying agreements could be used to shelter the carrier from a merger with American Airlines.

The financial aid package, which included a $270 million loan, was accompanied by a set of covenants that gave the state some control over the airline's Asian routes, Moe said. Those routes were used as guarantees of Northwest's financial commitment to the state.

Since Northwest has not paid off the loan, Moe believes it is appropriate to take another look at the agreement.

''That warrants re-examination,'' he said. ''Maybe there is some way to open this all up.''

Talk about major consolidation within the airline industry erupted last month after United Airlines announced plans to acquire US Airways for $4.3 billion. Northwest reportedly had merger discussions with American Airlines a week later. KLM Royal Dutch Airlines is in pre-merger discussions with British Airlines, and American also is talking to Delta Air Lines about a possible merger.

While Moe and others say they worry about what happens throughout the airline industry if the mergers are allowed to occur, they are most worried about the future of Northwest Airlines.

''We have cause for concern,'' said Rep. Kevin Goodno, R-Moorhead. ''Because of the bailout, we have a legitimate interest in Northwest Airlines. We have to look at past agreements and commitments made by Northwest.''

Moe equated the merger's potential impact on the state's economy to ''sustained low agricultural commodity prices.''

Beyond the loss of thousands of good-paying jobs, Moe said the merger could degrade air travel. A flight from Fargo to Cincinnati -- now routed through the Twin Cities -- could include stops in both Minneapolis and Chicago, he said.

Moreover, he said, the merger could jeopardize feeder routes from Fargo and other North Dakota and Minnesota cities.

''I think it ripples all the way through,'' Moe said. ''Service will be threatened. The run times amount to lost productivity and it is a big deal.''

But Rep. Collin Peterson, D-Minn., said there really is little public officials can do about the mergers. He said it is unlikely a Republican-dominated Congress will be eager to put more teeth in the antitrust law.

If the merger goes forward, Congress will hold hearings and ask questions, he said, but at the end of the day it is unlikely to regulate anything.

''Right now, with the Republicans in charge, they are not prone to have government involved in business,'' Peterson said.