go! sees record capacity in July

But parent Mesa's net income drops 76% on costs to return planes

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Mesa Air Group Inc. said yesterday its new interisland carrier go! "continues to move toward profitability" and that July probably will be the best operating month in the one-year-old airline's history.

Jonathan Ornstein, chairman and chief executive of Mesa, said more than 80 percent of go!'s seats were filled last month during a period in which the carrier took the airfare war to new levels with prices as low as $1 one way.

Ornstein made his remarks during a conference call in which the parent company announced that its fiscal third-quarter net income fell 76.2 percent to $2.6 million, or 8 cents a share, compared with $10.9 million, or 25 cents a share, a year ago.

Revenue climbed 5 percent to $355.9 million from $339 million as the size of Mesa's fleet grew to 199 aircraft from 185 a year earlier.

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Mesa Air Group Inc., the catalyst of an interisland airfare war that has seen prices drop to unprecedented lows, said yesterday that go! "continues to move toward profitability" and that more seats likely were filled on its Hawaii aircraft in July than any previous month.

Jonathan Ornstein, chairman and chief executive of Mesa, said during the parent company's earnings conference call that go!'s load factor on its five 50-seat Bombardier CRJ-200 aircraft exceeded 80 percent in July during a month that saw go! drop its one-way fares to as low as $1.

Earlier this week, Hawaiian Airlines President and Chief Executive Mark Dunkerley said the Hawaii marketplace has remained "awash with discounts" since go!'s arrival in June 2006.

"We continue to develop the business," said Ornstein, noting that go!'s 72 percent load factor in June was up from 63 percent in the previous month and that June represented go!'s highest average fare for 2007.

He also said go!'s frequent-flier membership, now at 55,000, nearly doubled last quarter and that go! continues to see "good trends" in ancillary revenue through its advertising online and on its aircraft.

"We had to do a lot of work in understanding the (Hawaii) market, and in only one year, look at what we're carrying," he said. "We still believe we're carrying double our share in the local market and we don't have any connecting opportunities and no code-shares (with mainland carriers).

"Our view is we keep chipping away as we move toward profitability. This month (July) will probably be our best operating month in our history."

Ornstein's comments about go! came during the question-and-answer session of Mesa's conference call in which the company announced that its overall earnings in its fiscal third quarter fell 76.2 percent from a year earlier.

Net income was $2.6 million, or 8 cents a share, compared with $10.9 million, or 25 cents a share, a year ago.

Revenue climbed 5 percent to $355.9 million from $339 million as the size of Mesa's fleet grew to 199 aircraft from 185 a year earlier.

Excluding $1.4 million in costs due to the return of some Dash-8 aircraft, a $1.7 million cost associated with a vendor's contract settlement and some other items, Mesa had net income of $5.1 million, or 15 cents a share, matching analysts' forecasts.

Pro forma net income a year ago was $11.5 million, or 26 cents a share.

Maintenance costs rose 18 percent to $71.8 million from $60.8 million but fuel costs decreased 0.9 percent to $120.9 million from $122 million.

Ornstein also said Mesa continues to prepare for the start of its Chinese joint venture, KunPeng Airlines, and that it expects to begin service with three CRJ-200s in mid to late September.

Ornstein he said he hopes to be up to 20 aircraft of varying sizes by the start of the Beijing Olympics in July 2008.