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Mesa Settles With Hawaiian


Mesa Air Group announces settlement with Hawaiian Air

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Apr 30, 2008

NEW YORK — Mesa Air Group Inc. and Hawaiian Airlines announced this morning that they have settled their long-running dispute over inter-island Hawaiian service.

Under the terms of the settlement, Mesa did not admit wrongdoing but will pay Hawaiian $52.5 million from a bond it previously posted. Mesa said the agreement does not prevent its go! subsidiary from flying in the interisland market.

Phoenix-based Mesa launched go! in June 2006. Honolulu-based Hawaiian sued Mesa that same year, alleging the company misused company secrets — including figures on route profitability, passenger profiles, and expansion plans — Hawaiian gave Mesa when the latter was going through bankruptcy reorganization and seeking investors.

Mesa shares jumped 15 cents, or 27.3 percent, to 70 cents. Hawaiian Holdings Inc. shares rose 12 cents to $8.02.

Mesa currently operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico., the company said. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees.

HOW EVENTS UNFOLDED

March 2003: Hawaiian Airlines files for bankruptcy protection.

April 2004: The federal bankruptcy court allows potential investors to study

Hawaiian's books under a confidentiality agreement.

April to May 2004: Mesa downloads more than 60 documents, including more

than 2,000 pages of proprietary information about Hawaiian's financial

performance, projections and business strategy.

May 2004: Mesa is eliminated as a bidder for Hawaiian.

December 2004: Aloha Airlines files for bankruptcy protection.

April 2005: Mesa starts looking into acquiring or forming a business

alliance with Aloha. Mesa retains GCW Consulting, an Arlington, Va.-based

aviation consulting firm, to "look at a possible acquisition or some other

structure for entry into the Hawai'i market."

June 2005: Hawaiian Airlines exits bankruptcy protection under the ownership

of California-based Ranch Capital LLC.

January 2006: Mesa's Chief Executive Officer Jonathan Ornstein tells

investors that Mesa's decision to enter the interisland market was based on

its review of Hawaiian and Aloha Airlines during their bankruptcy cases.

February 2006: Hawaiian sues Mesa to bar the company from operating in the

interisland market for two years. Hawaiian alleges Mesa improperly used

confidential data it received when Hawaiian was in bankruptcy. Hawaiian

later reduces the length of the ban it seeks to one year.

March 2006: Mesa begins selling tickets for its June 9 launch of interisland

carrier go!

March 2006: Mesa files countersuit, accusing Hawaiian of trying to illegally

block competition.

June 2006: Mesa launches go!

September 2006: Hawaiian alleges Mesa tried to drive Aloha out of business

and cites e-mails by Mesa Chief Financial Officer Peter Murnane. One e-mail

says: "If we assume Aloha stays in market and in business forever, this

project makes no sense. We definitely don't want to wait for them to die,

rather we should be the ones who give them the last push."

October 2006: U.S. Bankruptcy Judge Robert Faris rejects Hawaiian's request

for a ban but says Mesa "probably breached the confidentiality agreement" by

failing to return or destroy material it received. Faris also concludes that

"at one time, Mesa hoped to drive Aloha out of business."

October 2006: Aloha sues Mesa, alleging that it misused confidential

information in an attempt to drive Aloha out of business.

December 2006: Faris throws out Mesa's countersuit against Hawaiian.

August 2007: Hawaiian accuses Mesa CFO Murnane of destroying several

computer files that included confidential Hawaiian material.

October 2007 : Faris orders Mesa to pay Hawaiian $80 million in damages for

misusing confidential business information.

December 2007: Faris rules Mesa should have done more to protect key

evidence that was destroyed by the company's former chief financial officer

and does not grant a new trial.

January 2008: Reeling from the $80 million judgment, Mesa reports the

largest quarterly loss in its history, a total of $68.2 million, or $2.37

per share, during the three months that ended Sept. 30, 2007.

February 2008: Higher fuel and maintenance costs helped triple losses at go!

airline during the last three months of 2007, the company reports in a

Securities and Exchange Commission filing. Mesa says go! had an operating

loss of $6.6 million in that quarter, up from a $1.9 million loss in the

same period a year earlier.

March 2008: Aloha Airlines files for bankruptcy for the second time in a

little more than three years, blaming go! and Mesa.

March 30: Aloha abruptly shuts down passenger service and seeks to sell its

contract services and cargo units.

April 8: Facing the loss of a $20 million-a-month contract with Delta Air

Lines, Mesa warns investors of a potential bond default. In a filing with

the Securities and Exchange Commission , Mesa said it is seeking shareholder

approval to issue up to $37.8 million in new common stock to pay off its

bondholders.

April 28: Aloha shuts down its cargo division, which carries 85 percent of

all goods by air between the islands.

Today: Mesa announces a settlement with Hawaiian Airlines for $52.5 million,

without admitting any wrongdoing.

honoluluadvertiser.com

Mesa Air Group announces settlement with Hawaiian Air



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