Hi guys. I see where our friend Godzilla reported the news from yesterday concerning the Mesa Air Group/Hawaiian Airlines settlement. One thing he didn’t mention but was fairly telling as to why the suit was settled for the amount it was. Mesa was forced to put up a bond for $90 million as a result of the original trial verdict in which U.S. Bankruptcy Judge Robert Faris found the airline guilty of using confidential information about Hawaiian as part of its planning for its start-up airline go!.

Subtract the $52.5 that Hawaiian received in the deal and what do you end up with?

That’s right. Basically $37.5 million.

And how much cash does Mesa Air Group need to pay off its convertible bond owners in June – when that convertible issue becomes due? That’s right. About $37.5 million.

So, you say — so what? Well what it says to me is that Mesa is not, obviously, going to go into bankruptcy without putting up a fight. The other reason this is good news for Mesa is that they would have found it hard to get any traction on any kind of potential “deal” involving the airline or parts of the airline, as long as that verdict stood and the appeal was still in motion — and it did not seem like it was going to be possible to get an answer from the appeals court until after the convertible note was due in June.

So it works out well for Hawaiian, as I think they are probably ecstatic to get their hands on $52.5 million in cash, especially in this environment, and for Mesa’s immediate financial situation — it gives them more time to figure out their next move. But make no mistake — they just coughed up $52.5 million in cash — a major hit. No matter how you try and slice and dice it.

Ticker: (Nasdaq:MESA)

Technorati Tags: airlines, Hawaiian Airlines, Mesa Air Group