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The Honolulu Advertiser
Posted on: Tuesday, February 14, 2006

Hawaiian Airlines sues new competitor

By Rick Daysog
Advertiser Staff Writer

Hawaiian Airlines is seeking to block Mesa Air Group Inc.'s entry into the interisland market for two years, alleging the low-cost carrier improperly used confidential business data it received when Hawaiian was in bankruptcy.

Phoenix-based Mesa plans to begin flying interisland routes in April or May with one-way fares as low $43.

Mesa was one of several potential suitors that expressed an interest in acquiring Hawaiian during its bankruptcy reorganization. Hawaiian said that Mesa was given access to more than 2,000 pages of confidential financial information about Hawaiian's routes, marketing plans, financial projections and other records.

Mesa's CEO Jonathan Ornstein said Hawaiian's suit indicates "how afraid of us they really are. They are doing everything they can so that they can continue to overcharge the Hawai'i people."

Hawaiian attorney Bruce Bennett wrote in the suit that "If Mesa is allowed to enter Hawai'i's interisland market, having been provided with access to and improperly used and retained Hawaiian's proprietary information ... Hawaiian would incur substantial losses by virtue of reduced revenues, market share and customer relationships."

In September, Mesa announced plans to start its new, low-cost interisland carrier to compete directly against Hawaiian and Aloha Airlines.

"The thrust of this is to prevent competition," said Ornstein.

Hawaiian, which filed for bankruptcy in 2003, emerged from Chapter 11 reorganization last June under the ownership of California-based Ranch Capital LLC.

In its complaint, Hawaiian is seeking unspecified monetary damages in addition to the two-year injunction barring Mesa from operating interisland flights.

Hawaiian says the information available to potential investors during its bankruptcy was subject to an April 2004 confidentiality agreement, which barred Mesa from using any of the information for two years, Hawaiian said.

Bennett, Hawaiian's attorney, said that Mesa's Ornstein told investors in a teleconference last month that Mesa had the benefit of looking at Hawaiian and Aloha books when they were under bankruptcy protection.

"The benefit that Mesa obtained from 'looking' at Hawaiian's interisland business would have come entirely from Mesa's review of trade secrets and proprietary information ... and not any pleadings or monthly reports filed by Hawaiian," Bennett wrote.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.