Hawaiian Air Moves to Keep Mesa Out

Months after it emerged from bankruptcy, Hawaiian Airlines woke up one morning to find low-cost commuter airline Mesa Air Group (MESA - Cramer's Take - Stockpickr) planning to enter its intra-island markets.

Not surprisingly, that development didn't make Hawaiian happy.

This week, Hawaiian filed a lawsuit in U.S. Bankruptcy Court for Hawaii, asking that Mesa be restrained from operating in the state for two years and fined an undisclosed amount. The suit alleges that Mesa CEO Jon Ornstein misused confidential business information obtained as a potential acquirer of Hawaiian during its bankruptcy reorganization.

Hawaiian, the operating unit of Hawaiian Holdings (HA - Cramer's Take - Stockpickr), emerged from two years of Chapter 11 bankruptcy-court protection in June.

"If Mesa is allowed to enter Hawaii's inter-island market, having been provided with access to and improperly used and retained Hawaiian's proprietary information to study the market over the past two years, Hawaiian would incur substantial losses by virtue of reduced revenue, market share, goodwill and customer relationships," the lawsuit said.

Ornstein said in September that Mesa would begin service this spring with 50-seat CRJ200s, serving routes that Hawaiian also flies. Posted fares are all under $100 round trip, or about half of Hawaiian's fares. Fares were loaded into the computer last month.

"These guys clearly don't want the competition," Ornstein said. "They like the fact that they can overcharge people with impunity, and now Mesa has filed fares that are half of what theirs are. When they saw our fares in the computer, I imagine they went ballistic."

Ornstein said his decisions on entering Hawaii had nothing to do with any information made available during the bankruptcy, which were primarily copies of aircraft leases, labor contracts and ground leases.

However, Hawaiian attorney Bruce Bennett said the court closely monitored the reviews of the data provided online to parties that signed a confidentiality agreement. According to the lawsuit, Mesa representatives visited the electronic data room six times and downloaded more than 60 documents containing over 2,000 pages, including future projections relating to Hawaiian's business. "There is a thorough and complete trail," Bennett said.