Mesa fires disgraced CFO Murnane

A federal judge ruled that Peter Murnane deliberately destroyed potential evidence

Mesa Air Group yesterday fired its chief financial officer, whose destruction of evidence figured prominently a federal lawsuit filed by Hawaiian Airlines.

The operator of interisland carrier go! said William Hoke, vice president of finance, will serve as the company's interim CFO, replacing Peter Murnane.

Murnane's departure had been expected after federal Bankruptcy Judge Robert Faris on Oct. 30 awarded Hawaiian $80 million in damages. Faris ruled that Mesa had used confidential information obtained as a potential investor during Hawaiian's bankruptcy to gain a competitive advantage in the Hawaii market.

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Mesa Air Group Chief Financial Officer Peter Murnane, who fell into disgrace after trying to cover up his destruction of evidence before the company's highly contentious trial with Hawaiian Airlines, was fired yesterday by the Phoenix-based carrier.

The operator of interisland carrier go!, which on Sept. 21 placed Murnane on paid administrative leave for up to 90 days while investigating the matter, said William Hoke, vice president of finance, will serve as the company's interim CFO.

Jonathan Ornstein, chairman and chief executive of Mesa, declined to comment on the departure of Murnane, a friend of more than 30 years.

Murnane's departure had been expected after federal Bankruptcy Judge Robert Faris on Oct. 30 awarded Hawaiian $80 million in damages, plus interest and attorney fees, following his finding that Mesa had used confidential information obtained as a potential investor during Hawaiian's bankruptcy to gain a competitive advantage in the Hawaii market.

Faris also ruled that Murnane deliberately destroyed potentially relevant evidence that Mesa had a duty to preserve.

Murnane had been scheduled to be the key witness for Mesa in defending itself in the lawsuit filed by Hawaiian. But after allegations surfaced that Murnane had used special software to deliberately erase data from his computers, Murnane was dropped as a witness and he hired a criminal defense attorney to represent himself.

Mesa argued in court that Murnane accidentally erased evidence while trying to conceal adult content on his computers. But Faris called two such incidents in 2003 or early 2004 "isolated" and said Mesa failed to offer a persuasive reason why he wiped his hard drives other than to destroy relevant evidence.

Ornstein said Mesa will appeal the verdict to federal District Court by Friday's deadline. He said the company won't be required to put up an $80 million bond or letter of credit until that time.

Meanwhile, a Standard & Poor's analyst said yesterday in a note to investors that Mesa is at risk of a "significant judgment" in a separate lawsuit filed by Aloha Airlines that probably will raise issues involving Mesa and Murnane from the Hawaiian case. He rated Mesa as a "strong sell."

"We remain negative on Mesa's decision to continue fighting it out in Hawaii," wrote Jim Corridore. "The company is unlikely to make money in that market."