Warnings that go! airline’s parent company may have to file for bankruptcy protection this summer is more bad news for the interisland market already reeling from the recent shutdown of Aloha Airlines.

Interisland fares are up by more than 32 percent since the March 31 closure of Aloha and the loss of another carrier would mean even higher prices and further economic turmoil for the hotels, car rental agencies and other tourism-related companies on the Neighbor Islands.

But don’t expect Mesa to pull out of Hawaii on its own accord.

In a news release last week, Mesa stressed that it’s here for the long haul and boasted that it’s having its best month ever. Bookings for this summer also look strong, the company said.

For Mesa, the development of its own brands such as go! and its China joint venture Kunpeng Airlines is a major part of its future growth.

Right now, most of the company’s revenues come from providing regional service for major domestic carriers like United Airlines, US Airways and Delta Air Lines.

As the potential loss of the $20 million-a-month Delta contract shows, the company is at the mercy of the big carriers and to major downturns in the U.S. airline business.

But all bets are off if Mesa winds up in a highly contested bankruptcy.

As in the Hawaiian Airlines bankruptcy, creditors could seek the appointment of a Chapter 11 trustee to run the affairs of the airline.

That trustee may not place the same value on a Hawaii airline whose operations lost $20 million even before it had to fork over more than $52.5 million to settle a lawsuit by Hawaiian Airlines for misusing confidential business information.

Maui Land & Pineapple Co. had a mixed year in 2007. Net income was up 11.1 percent but its stock price was down 11.9 percent and revenues were off 14 percent.

So why did the Kahului-based real estate and agriculture company give its Chief Executive Officer David Cole a $1 million bonus?

That bonus helped pushed Cole's 2007 total compensation to $4.1 million last year, making him the second-highest paid CEO in Hawaii last year behind Alexander & Baldwin Inc.’s Allen Doane, who earned $8.4 million.

Cole’s pay raise came after the company said it failed to meet several performance benchmarks that are tied to his overall compensation package.

Stock options are supposed to reward an executive for his company’s performance, said executive pay expert Linda Lampkin. The idea of giving an executive a bonus to cover the declining value of his stock options defeats the purpose of such awards.

“The whole point of stock options is to reward (executives) for performance,” said Lampkin, research director of ERI Economic Research Institute in Washington, D.C.

A company spokeswoman declined comment.

But in its filing with the SEC, Maui Pine described the bonus as a “discretionary cash payment” that company decided to give to Cole after it raised the exercise price on his stock options two years ago.

When Cole was first recruited by the company about five years ago, he negotiated a stock-option plan that gave him gave him options on 133,333 shares with an exercise price of $19.10 a share. That price was well below Maui Pine’s stock market price of $27.60 on the date of the option grant.

In 2006, the company had to raise the exercise price on Cole's stock options to $27.60 a share, or face significant tax consequences. New rules by the Internal Revenue Service penalize companies that grant stock options whose exercise prices are below the market value.

Under the plan, Cole would have ended up paying more than $1 million more to exercise his stock options. But instead, it’s the company and its shareholders that will end up footing the bill.

Remember Rain, the K-pop star whose canceled Aloha Stadium concert last year left thousands of local fans hanging?

Last June, local concert promoters sued Rain, whose real name is Jung Ji-hoon, and his South Korea handlers, JYP Entertainment Co. and Star M Entertainment.

Federal Magistrate Kevin Chang is now recommending that JYP and Star M pay more than $2 million to Hawaii-based Click Entertainment for the failed concert.

In a 16-page filing last week, Chang said that Click should be entitled to more than $1 million for fees and expenses and another $1 million in lost profits.

Chang’s findings still needs to be approved by U.S. District Judge David Ezra. And Click’s claims against Rain himself will be determined at a later date.

Rain -- whose Korean nickname Bi means rain -- is a popular South Korean pop singer, actor, dancer and model.

His June 15, 2007 Honolulu concert was one of several stops on a U.S. tour that included concerts in San Francisco, Atlanta, New York, and San Jose, Calif., which also were canceled.

Eric Seitz, Click’s attorney, said his client will be able to collect on any award that is finalized by Judge Ezra since JYP and Star M have significant business interests in the U.S.

American Savings Bank may end up footing the costly legal bills for Mainland attorneys defending the bank from charges that it coverd up fraud.

Lloyd’s of London is refusing to pay for most of the attorneys fees for prominent Washington, D.C. lawyer Michael Bromwich and the local law firm of Torkildson Katz Moore & Herrington.

According to a lawsuit filed by American Savings in state Circuit Court last month, Lloyd’s is balking at paying for the audit expenses and most of the million-dollar settlements paid to 93-year-old customer Ada Lim and the bank’s former security director Bert Corniel.

It’s not clear whether Lloyd’s is picking up the legal tab for San Francisco lawyer Walter Brown, the independent counsel retained by the audit committee of American Savings’ parent company Hawaiian Electric Industries Inc. to look into the Ada Lim matter.

Brown’s report to HEI’s board has never been made public.

A spokesman for American Savings declined comment.

The Advertiser previously reported that American Savings paid Lim and Corniel more than $1 million each to settle their lawsuits alleging that a former bank manager, Marylin Demotta, took hundreds of thousands of dollars from Lim.

Demotta was fired and was indicted last November by a federal grand jury.

Her case goes to trial in July but federal prosecutors are continuing their investigation into the bank’s alleged conduct.

American Savings has denied the cover-up allegations and has said that it fired Demotta immediately.

These lawyers don't come cheap.

Bromwich, a former inspector general for the Justice Department, is a partner in the Washington, D.C. firm of Fried, Frank, Harris, Shriver & Jacobson LLP.

He is the author of a 1997 report that criticized the FBI's crime lab for its handling of evidence in the Oklahoma bombing case.
He also was part of the federal government’s legal team that prosecuted Iran-Contra figure Oliver North in the late 1980s.

Brown, a partner in the San Francisco office of Orrick, Herrington & Sutcliffe LLP, specializes in white-collar criminal defense cases.

Brown represented former McKesson Corp. Chief Financial Officer Richard Hawkins, who was acquitted in 2005 on federal charges that he inflated revenues for the San Francisco-based pharmaceutical distributor.

The stock of go! airline’s parent company has risen 12 percent since it settled a lawsuit by Hawaiian Airlines. Is the worst over?

Shares of Mesa Air Group closed at 74 cents on the Nasdaq market on Friday, which is up from 66 cents on April 30 when Mesa announced its deal with Hawaiian.

The company’s stock hit an all-time low of 45 cents per share on April 24 and is off more than 85 percent since last October when U.S. Bankruptcy Judge ordered Mesa to pay $80 million to Hawaiian for misusing confidential business data.

Wall Street analysts are mixed about the company. Two consider Mesa’s stock a hold while a third -- Lily Ng of Merrill Lynch -- has a sell recommendation.

Ray Neidl of Calyon Securities stopped covering Mesa on April 11 after Mesa’s market capitalization fell below $20 million.

Despite the Hawaiian settlement, Mesa faces significant challenges.

At its annual meeting on Tuesday, Mesa is expected to ask shareholders for approval to issue new stock. The new shares are to help cover a $37.8 million payment due to Mesa's bondholders next month.

Mesa did receive some breathing room from its recent settlement with Hawaiian. By agreeing to pay Hawaiian $52.5 million, Mesa gets $37.5 million back from the $80 million bond that it posted after it lost the ruling.

That amount very close to the amount due to bondholders.

But there are other troubles.

Mesa faces the potential loss of a $20 million-a-month contract to fly regional routes on the Mainland for Delta Air Lines. That contract generates about 18 percent of Mesa’s $1.3 billion in annual revenues.

Mesa has similar contracts with United Airlines and US Airways and a merger that’s being discussed between those two legacy carriers would be disastrous for Mesa.

And don’t forget Aloha Airlines’ lawsuit. Aloha may no longer be operating but its court-appointed bankruptcy trustee has a duty to pursue the local airline’s anti-trust suit against Mesa. The potential award from such a lawsuit could be much higher than $80 million.