Delta could face a $40 million blow over the NRA after backlash from Georgia lawmakers -- but the airline still won't move its headquarters

  • The Georgia legislature passed a tax reform bill on Thursday which excluded a provision that allowed airlines to re-fuel at Hartsfield-Jackson Atlanta International Airport without paying the state’s sales tax.
  • The exclusion was motivated by Delta Air Lines‘ announcement that it would join a number of businesses in ending its discount program for National Rifle Association members.
  • The bill will cost the airline, which uses Hartsfield-Jackson as its main hub and whose headquarters are located in Atlanta, $US40 million.
  • But Delta is unlikely to move its headquarters, as the costs would likely outweigh the benefits.

The Georgia legislature passed a tax reform bill on Thursday which excluded a provision that allowed airlines to re-fuel at Hartsfield-Jackson Atlanta International Airport without paying the state’s sales tax. The bill now awaits approval from the state’s governor, Nathan Deal, who he said he would sign it during a press conference on Wednesday.

The decision to remove the exemption was motivated by Delta Air Lines‘ announcement that it would join a number of businesses in ending its discount program for National Rifle Association members in the wake of the mass shooting in Parkland, Florida in February.

If approved, the removal of the fuel tax exemption would hit Delta hardest. The airline, which uses Hartsfield-Jackson as its main hub and whose headquarters are located in Atlanta, would have received $US40 million of the $US50 million airlines were set to save with the exemption. Delta’s 33,000 Georgia employees also make it the state’s largest private employer.

Delta won’t move its headquarters from Atlanta

Delta CEO Ed Bastian addressed the Georgia legislature’s decision in an email to company employees on Friday.

“Our people and our customers have a wide range of views on how to increase safety in our schools and public places, and we are not taking sides. Our objective in removing any implied affiliation with the NRA was to remove Delta from this debate,” he wrote. “Our decision was not made for economic gain and our values are not for sale.”

Bastian also said that the company was committed to staying in Atlanta.

“None of this changes the fact that our home is Atlanta and we are proud and honored to locate our headquarters here. And we are supporters of the 2nd Amendment, just as we embrace the entire Constitution of the United States,” he said.

Moving would likely cost more than the loss of the fuel tax exemption and create operational inefficiencies by moving further from the airline’s main hub. Given that Hartsfield-Jackson is three times larger than Delta’s second and third busiest hubs, Minneapolis and Detroit, it’s also unlikely the airline would want to look for a new hub.

Atlanta’s chances of getting Amazon’s HQ2 may be affected

The Georgia legislature’s retaliation against Delta could hurt Atlanta’s standing as a contender for Amazon’s second headquarters, HQ2. Atlanta is one of 20 cities that Amazon is considering for HQ2, and some analysts have pegged the city as one of the favourites to be chosen as the site for Amazon’s second headquarters.

Deal echoed those concerns in a press conference on Wednesday. Though he said he would sign the bill, he expressed reservations over the motivations behind the removal of the fuel tax exemption and said he would find “a pathway forward for the elimination of sales tax on jet fuel, which is non-negotiable.”

“I will sign it into law, because it is what is right for our citizens,” Deal said of the bill, before stating his concerns over the way its composition and passage were handled.

“If we want to remain a truly competitive hub for global commerce and not be overshadowed by neighbouring states, then we need to address the concerns of all in a dignified manner and with a maturity that our people deserve … We were not elected to give the late night talk show hosts fodder for their monologues or to act with the type of immaturity that has caused so many in our society to have a cynical view of politics.”

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