Aloha Airlines Sues Mesa Air Group for Misuse of Confidential Information |
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By: Aloha Airgroup, Inc. Posted: 2006-10-15 01:56:32 |
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In a suit filed today by Aloha Airlines, Inc., and Aloha Airgroup, Inc., in state Circuit Court, Aloha said Mesa Air Group, Inc., received confidential information as a potential investor in Aloha and used it improperly to enter Hawaii's inter-island market with intent to drive Aloha out of business.
Aloha alleges in its suit that Mesa used Aloha's proprietary information to unethically compete in the Hawaii market by offering air fares that failed to cover Mesa's costs. Mesa's Chief Executive Officer Jonathan Ornstein has stated more than once that Mesa's Go! can "fly empty" for five years with the profits from Mesa's Mainland operations. This indicates that Mesa is not covering its costs and is ultimately motivated to offer unrealistic fares with intent to drive out competition from the Hawaii market. Aloha's filing also points out that according to other legal documents, Mesa's Chief Financial Officer George Murnane III sent an e-mail message, stating that Mesa's entry would make "no sense" if Aloha remained in the inter-island market: "We definitely don't want to wait for them to die; rather we should be the ones to give them the last push." As a result of the substantial and continuing economic harm brought on by Mesa's actions, Aloha is seeking damages and injunctive relief to stop Mesa from competing unfairly, and threatening the jobs of 3,500 Aloha Airlines employees in Hawaii. "Mesa came to Hawaii under false pretenses, making false promises," said David A. Banmiller, Aloha's president and chief executive officer. "Aloha is not opposed to competition, we're opposed to unfair competition, and a competitor whose objective appears to be the demise of Aloha Airlines, ultimately to the detriment of Hawaii's consumers." The Aloha suit stated that Mesa signed two confidentiality agreements in 2005 and January 2006 stipulating that Mesa would only use the confidential information for the purpose of pursuing an investment. If there was no investment, the agreements called for Mesa to promptly destroy Aloha's confidential information, including financial records, business plans, internal forecasts, customer lists, and other highly sensitive data regarding projections for the inter-island market. The filing alleges that Mesa improperly used the information to compete directly against Aloha, with the ultimate goal of driving Aloha out of business. An aviation services company registered in Nevada and based in Arizona, Mesa began inter-island service with its Go! subsidiary on June 9, 2006. In its filing, Aloha noted that Mesa's Ornstein admitted to shareholders that Mesa's decision to begin inter-island passenger service in 2006 was based on confidential information obtained from Aloha and Hawaiian Airlines during their bankruptcies. Ornstein was quoted as telling shareholders: " ... we do have the benefit of looking at both Aloha and Hawaiian when they were in bankruptcy ... " Founded in 1946, Aloha Airlines is a Hawaii-based transportation services company that provides inter-island passenger and cargo services, transpacific service linking Hawaii with California and Nevada, and contract aviation services throughout Hawaii. |
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