NWA FCU Looks for New Properties, Still Won't Pay Royalty Fee as Northwest Airlines Extends July Leases

MINNEAPOLIS – Despite Northwest Airlines’ May 8 agreement to extend the July 5, 2003 subleases of several properties occupied by NWA Federal Credit Union to March 21, 2004, the credit union is moving forward in its search for other locations. Citing a notice from Northwest, the credit union said the leases for branches in Minneapolis, St. Paul and Detroit will be extended, which covers the “majority of our offices and ATMs on Northwest property.” Still, “while this decision is welcome news,” the credit union wrote on its Web site, “we are continuing our efforts to find other space to house our operations and to maintain our level of services and convenience for all members. Northwest’s intent to not renew our combined lease and services agreement remains in effect and we believe it is prudent to continue planning for that development.” “It’s the unknown after March 21 next year,” said John Wagner, NWA FCU’s vice president of marketing. “It would be prudent for us to look forward.” NWA FCU pays Northwest rent for seven offices, including four in Minneapolis and 23 ATMs at Northwest facilities across the nation. The credit union’s lease for its Detroit office and seven ATMs were set to expire in July and its lease for the six remaining offices and 16 remaining ATMs expires March 21, 2004. Beyond acknowledging that there are two separate lease extension agreements between Northwest and the credit union for the ATMs located at the Northwest World Gateway at Detroit Terminal and the Minneapolis/St. Paul International Airport, Northwest Airlines Spokeswoman Mary Stanik would not comment further on the matter only saying that the latest move is “an effort to work with the credit union and (for it) to continue to provide convenient financial services to our employees.” The credit union is going forward with plans to move several offices at the MSP Airport and close an office in Detroit. ATMs in Minneapolis, St. Paul, Detroit, Chisholm, Minn. and San Francisco will also be moved or removed. At what seems to be at the center of the lease renewal tug-of-war is the airline’s demand of the credit union to pay a royalty/user fee for the use of Northwest’s name and logo, citing it “can no longer subsidize the credit union while it makes $15 million to $20 million per year in profit.” NWA FCU President/CEO Paul Parish has said the fee amounts to at least $6 million annually – “equal to more than half our net income.” Parish said regulators said paying the fee is “not permissible.” “Our position has not changed on the royalty fee,” Wagner said, adding that the credit union will not pay it. Stanik did not comment on the fee or whether the airline is still requesting it. In an April 29 statement, Parish said the use of the Northwest images on credit union materials such as checks and debit cards “has been the practice of the credit union since our founding in 1938 and we submit such uses to Northwest for their approval,” adding “Northwest’s management has consistently supported our use of those materials as a way to underscore Northwest’s impact on the community.” NWA is the largest credit union in the state with 115,000 members and $1.3 billion in assets and has had a 65-year relationship with Northwest. Nearly 90% of the airline’s active employees belong to the credit union. -