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Mesa Air Group


Hawaii air carrier parent loses $68.2M

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Jan 15, 2008

Reeling from an $80 million legal judgment, the parent of interisland carrier go! reported the largest quarterly loss in its history.

Mesa Air Group, which kicked off the interisland fare war when it launched go! in June 2006, said yesterday that it lost a total of $68.2 million, or $2.37 per share, during the three months that ended Sept. 30, 2007.

The loss compares with a net profit of $4.8 million, or 12 cents per share in the year-earlier quarter.

For the full fiscal year, Mesa lost $81.6 million, or $2.63 cents a share, which compared with a net profit of $33.9 million, or 84 cents a share, in fiscal year 2006.

"We are certainly disappointed with our 2007 earnings results, which have been adversely impacted by the judgment rendered in the Hawaiian Airlines litigation," said Jonathan Ornstein, Mesa's chief executive officer.

"We believe the judgment was wrong and we believe an appellate court will ultimately find the sanctions and the judgment should be set aside."

Shares of Mesa rose 14 cents to close at $2.88 on the Nasdaq market. During the past 12 months, Mesa's stock has fallen more than 64 percent.

In October, federal bankruptcy Judge Robert Faris ordered Mesa to pay Hawaiian Airlines $80 million for misusing confidential business information to launch go! airlines.

Hawaiian had sued Mesa alleging that Mesa received hundreds of pages of confidential financial information about Hawaiian's routes, marketing plan and financial projections while Hawaiian was in bankruptcy and improperly used the material to launch its own interisland carrier.

The quarterly loss is the largest reported by Mesa. The company's previous record came in the fourth quarter of 1997 when it lost $44.2 million, according to figures compiled by Bloomberg LLC.

Mesa said it took an $86.9 million pretax charge during its latest quarter to reflect Faris' judgment. The company, which is appealing, said its cash balances have fallen by $90 million from $208.6 million on Sept. 30 to about $118.6 million in November due to Faris' ruling.

The loss also comes as go! has raised its standard interisland ticket price by $10 to $49 due to the soaring price of fuel, prompting Hawaiian and Aloha to follow suit.

During a call with investors and analysts, Ornstein said he believes that Mesa will meet all its financial requirements.

The company noted that go!'s planes were 74 percent full during the fourth quarter, which was up 6 percentage points from the previous fourth quarter. Mesa also said that go!'s frequent flier membership has increased by 20 percent from a year ago.

"This has been a tough quarter for us," said Ornstein.

honoluluadvertiser.com

Hawaii air carrier parent loses $68.2M
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