Mesa Must Pay $52.5 Million, But Not Admit Wrongdoing
In an agreement marking the end of a
contentious legal battle, on Wednesday Hawaiian Airlines announced
it reached a settlement of its lawsuit with Mesa Air Group, Inc.,
regarding Mesa's misuse of confidential and proprietary information
obtained during Hawaiian's Chapter 11 plan of reorganization in
2004.
"This settlement is the last chapter in the legal dispute over
Mesa's misuse of Hawaiian's confidential information," said Mark
Dunkerley, Hawaiian's President and CEO. "We were delighted with
the award of damages and this settlement."
As ANN reported, a US
Bankruptcy Court judge ruled in October 2007 Mesa illegally used
confidential information obtained from Hawaiian Airlines to launch
its new go! interisland airline... and ordered Mesa to cough up $80
million for the transgression. Judge Robert J. Faris ordered the
fine to compensate for damages Hawaiian Airlines has incurred since
go! entered the Hawaii market.
Faris determined Mesa used information it obtained while a
bankrupt Hawaiian Airlines courted Mesa as a possible investor --
including profitability figures for local and Hawaii-US mainland
routes, and passenger profiles -- to turn around and launch its own
airline. The judge said Mesa breached a confidentiality agreement
when it failed to return the information to Hawaiian, or destroy
it.
In November 2007, Mesa filed a notice of appeal to the judge's
ruling, and was required to post a $90 million bond as security for
the judgment, post judgment interest, and attorney's fees, pending
the outcome of the appeal.
Under the terms of the settlement agreement reached this week,
Hawaiian Airlines will receive a cash payment of $52.5 million and
Mesa will withdraw its appeal of the $80 million judgment (plus
interest, attorney's fees and costs) awarded against Mesa by the
United States Bankruptcy Court in October 2007. The cash payment is
required to be made within two business days of approval of a
stipulation by the bankruptcy court that will follow dismissal of
the appeals.
In a statement to ANN, Mesa was quick to point out the
settlement does not require the airline to admit wrongdoing. "This
settlement does not restrict in any way go!'s ability to continue
to offer services in the Hawaiian interisland market," the carrier
added.
The June 2006 entrance of go! into the Hawaiian market is widely
believed to have led to the demise of another storied Hawaiian
carrier, Aloha Airlines. That airline filed Chapter 11 bankruptcy
in March, and halted all passenger service soon thereafter. Aloha
blamed its demise on Mesa's "illegal" predatory pricing
strategy.
With Aloha no longer flying, the interisland market is once
again the domain of but two airlines... Hawaiian, and go!