A federal judge ruled yesterday that the parent of go! airline misused confidential information from Hawaiian Airlines when setting up the new interisland carrier.

The preliminary ruling was a blow to Mesa Air Group, owner of go!, which is being sued for $177 million in damages by Hawaiian.

If Hawaiian wins the damages, Mesa may be forced to shut down go!, according to at least one industry analyst.

In a scathing rebuke of Mesa, U.S. Bankruptcy Judge Robert Faris said the airline based its decision to start go! airlines on information obtained from Hawaiian while Hawaiian was in bankruptcy and being shopped around to potential new owners.

"Mesa kept confidential information from Hawaiian and did not return it or destroy it," Faris said. "Mesa misused confidential information when deciding to enter the Hawai'i market. The misuse was a substantial factor in Mesa's decision on entering the Hawai'i market."

Faris' statements indicate he has accepted some of Hawaiian's key arguments as the trial moves to its main phase.

"This was an important milestone," said Hawaiian Airlines in a statement.

In the worst-case scenario for Phoenix-based Mesa, the company may be forced to seek bankruptcy protection, said Scott Hamilton, a Washington state-based aviation industry consultant.

Since the June 2006 launch of go!, Mesa's cash holdings have fallen from about $345 million to about $198 million, Hamilton said, making it difficult for Mesa to pay $177 million in damages.

"There's not a single ray of sunshine in what's transpired since the beginning of the litigation for Mesa," Hamilton said. "There are dangers all over the place for Mesa on this thing."

In its suit, Hawaiian has alleged that Mesa downloaded thousands of pages of proprietary information about Hawaiian's routes, marketing plans and financial projections and used the information to start go!

Hawaiian also has alleged that Mesa Chief Financial Officer Peter Murnane deleted hundreds of pages of computer records that would have shown that Mesa misappropriated the Hawaiian information.

Hawaiian Chief Executive Officer Mark Dunkerley said that Faris' ruling validates what Hawaiian has been saying all along — that Mesa misused confidential information and tried to cover up that act by destroying computer files.

In a news release after yesterday's announcement, Hawaiian added:

"Today the court found that Mesa should be held accountable for what can only be called illegal and grossly unethical conduct. Mesa's chief financial officer, who is still on Mesa's payroll, was found to have destroyed evidence and lied about it.

"The explanation for that conduct offered by Mesa's chief executive officer, Jonathan Ornstein, was rejected by the court, as was Ornstein's attempt to distance Peter Murnane from Mesa's decision to enter the Hawaiian marketplace."

Ornstein denied that Mesa used confidential material to start go! and said he was confident that the ongoing trial will prove that the airline relied on publicly available data.

"I highly doubt that people of Hawai'i don't see through this for what it is: a blatant attempt to eliminate competition, raise fares and enrich themselves at the public's expense," Ornstein said.

In his ruling yesterday, Faris said he found no evidence that Mesa employees other than Murnane were part of the destruction or were aware of Murnane's activities.

But Faris said the company should be held accountable since Murnane is the company's third-highest-ranking official and the deleted files were on the company's computers.

Faris also dismissed Mesa's last-minute explanation that Murnane erased the data when he was deleting pornographic material from his work computers.

Max Blecher, an attorney for Mesa, called Murnane a "rogue actor" and that no other Mesa employee was aware of the CFO's activities.

Murnane was placed on a 90-day paid leave of absence by Mesa's board of directors last week over his alleged destruction of evidence.

Meanwhile, Dunkerley said he was "astonished" by the lengths that Mesa has gone through to defend its alleged misconduct.

"To put an employee — indeed a friend of the CEO for 30-odd years — to hang him out to dry, to push him under the bus, with this absolutely flimsy and transparent argument about pornography is unbelievable," Dunkerley said.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.