Steveair
Well-known member
- Joined
- May 15, 2004
- Posts
- 433
Corporate espionage, pornography part of odd airline battle
Regional giant Mesa Air Group came out a loser yesterday in one of the more unusual aviation court cases in recent history. In the ruling, a U.S. bankruptcy court judge ordered Mesa to pay Hawaiian Airlines $80 million in damages over a dispute involving go!, Mesa's intra-Hawaii start-up carrier. The Associated Press writes "Judge Robert Faris said the amount approximates Hawaiian's damages since Mesa Air Group created go! and entered the Hawaii market last year using confidential information it obtained from Hawaiian's bankruptcy proceedings." Mesa obtained Hawaiian's "company secrets" when Hawaiian was under bankruptcy protection and courting investors. The Honolulu Advertiser says that information included "internal projections on Hawaiian Airlines' future operations and financial performance; details of Hawaiian's expansion plans" and "lists of contracts with the local airline's third-party vendors." The judge ruled that Mesa breached a confidentiality agreement when it did not return -– or destroy -– Hawaiian's confidential material. In a statement, Hawaiian CEO Mark Dunkerley says the "ruling is a triumph for fair competition and ethics over dishonesty and illegal behavior. Nobody benefits when a company like Mesa misuses confidential information to gain an unfair competitive advantage, then lies about it and destroys evidence."
Mesa's go! had already drawn the ire of some in Hawaii, who worried that fare wars prompted by go!'s arrival ultimately would doom Hawaiian or Aloha Airlines -– the state's two large homegrown carriers. Even against that backdrop, the Mesa case has been full of quirks and oddities. One of the case's strangest twists came in an accusation against Mesa CFO Peter Murnane. The Advertiser says "he downloaded thousands of pages of proprietary information about Hawaiian's business, then destroyed the records, saying he thought he was deleting pornography from his work computers." Mesa's board placed Murnane on a 90-day leave of absence after that claim.
The Honolulu Star-Bulletin writes "aviation industry consultant George Hamlin suggested that Mesa might want to cut a deal with Hawaiian to have go! exit the market in exchange for reducing the judgment." Hamlin, who is managing director of consulting firm Airline Capital Associates, says "at this stage, it sounds like vindication for Hawaiian. If go! does continue to operate in the market, it might be an opportune time to exit if it's losing money."
What's next for go!?
The Honolulu Advertiser writes that a court ruling (see above) ordering Mesa to pay $80 million to rival Hawaiian clouds go!'s future with a bit of uncertainty. "Mesa said it will likely appeal the decision and said it remained committed to the Hawaii market. But analysts said that if the ruling stands, it will likely affect whether go! continues to offer $19, $29 and $39 one-way fares, or operate at all in Hawaii," the Advertiser writes. Still, Mesa CEO Jonathan Ornstein said the company is "more committed" to the interisland market after the ruling.
"This definitely hurts Mesa," says Nick Capuano, managing director and head of equity research at Los Angeles-based Imperial Capital that follows Hawaiian. "It's now less likely that they will slug it out in a money-losing market," he says to the Advertiser. But despite resentment by some in Hawaii, the Advertiser says "many of the airline's passengers yesterday said they would be disappointed if it goes out of business." Hilo resident Lyman Jakahi tells the paper: "I would be disappointed if they (folded). They really made interisland travel affordable."
