<B>Mesa Air Group's [MESA] plans to start a new regional carrier in Hawaii have encountered unexpected turbulence.

Hawaiian Airlines last week sued Mesa in bankruptcy court contending that Mesa breached a confidentially agreement it signed in 2004. Mesa CEO Jonathan Ornstein was among a number of potential investors that bid on Hawaiian while it was reorganizing in Chapter 11. Mesa's offer was rejected. Hawaiian had granted Mesa extensive access to confidential documents with a stipulation that it not use the information to compete with Hawaiian for two years.

Since last September, Mesa has been working on a plan to begin intra-island service using four to six 50-seat Bombardier [BBD] CRJ 200s. The implementation of the plan has been held up - in part - as Mesa seeks used aircraft for the right price. Mesa has also delayed the announcement of the proposed carrier's name and marketing plan.

The new operation is now slated to start early in the second quarter.

Hawaiian is seeking an injunction to block the start of the Mesa Hawaiian unit for two years.

In the court papers, Hawaiian quotes Ornstein's Jan. 25 call to analysts discussing the carrier's most recent quarter. In the call, Ornstein notes that Mesa looked at both Hawaiian and Aloha Airlines, while they were in bankruptcy. Hawaiian claims Ornstein is building his business plan not on the public information, but on the confidential data.

Ornstein has labeled the lawsuit an effort by Hawaiian to keep Mesa out of the islands.