Duluth officials say they expect to enter final negotiations that could lead to a long-term lease for the city's jet maintenance base with Minnetonka-based Petters Aviation -- the parent company of Sun Country Airlines.
Tom Cotruvo is executive director of DEDA, Duluth's economic development agency. DEDA just got clear title to Northwest Airlines former jet maintenance base. Cotruvo says DEDA has been talking with Petters Aviation since last December.
"At this point, we have agreed to enter into negotiations on the building, and we have agreed on the terms on a letter of intent," Cotruvo says. "And that letter of intent basically provides that Petters will pay DEDA's holding costs during the time we negotiate, and we will attempt to see if we can put a deal together to lease them the building."
Duluth's jet maintenance base was built in 1995. At one time the base employed close to 400 mechanics. But Northwest Airlines abandoned the facility after mechanics struck the airline two years ago.
This spring, an agreement was settled between DEDA, the airline, the state of Minnesota, and other parties, that gave DEDA the ability to lease the facility.
Cotruvo says Petters would not use the facility as a maintenance base, per se, at least at first.
"The primary use that Petters is looking at for the building is what they call a completion center for the Airbus 318 business jet," Cotruvo says.
We feel at this point that the scope of their project is going to create enough jobs to make this an attractive project for us.Tom Cotruvo, Duluth economic development agency
Petters Aviation President Jay Salmen told the Twin Cities Business Journal his company would be installing things like in-flight entertainment centers and other features into the jets. He says there's a worldwide shortage of completion centers like this, and that the company could capitalize on that shortage and be a good corporate citizen of the state of Minnesota.
If DEDA agrees to the deal this week, Petters would have 180 days to conduct a feasibility study and negotiate a lease. If the deal works, Cotruvo says Petters will need a lot of people.
"We will negotiate the number of jobs as part of the lease with Petters, and so we'll know more about how many people they intend to hire, as we move forward with that," says Cotruvo. "But we feel at this point that the scope of their project is going to create enough jobs to make this an attractive project for us."
U.S. Rep. Jim Oberstar, whose 8th Congressional District includes Duluth, calls the potential deal a positive development that demonstrates the maintenance base is a viable facility that will attract a new tenant.
Duluth Mayor Herb Bergson says Petters has a great reputation within the airline industry, and the capability to fully utilize the Duluth facility. Duluth officials say they hope the company eventually resumes jet maintenance at the facility.
DEDA will vote Thursday to open negotiations on a lease with Petters Aviation.