Go! reconsiders larger planes

The carrier has lost $26 million for parent Mesa since starting here in June 2006

Mesa Air Group Inc., which has lost more than $26 million in Hawaii since it launched the interisland carrier go! in June 2006, said it is once again considering replacing the go! fleet with larger aircraft.

The Phoenix-based carrier said the larger jets could be delivered as early as April 2009.

Jonathan Ornstein, chairman and chief executive of Mesa, said the larger planes -- possibly 90-seat CRJ-900s -- are more efficient than go!'s current fleet of 50-seat CRJ-200s. Ornstein's comments yesterday followed the disclosure in a Securities and Exchange Commission filing on Thursday that go!'s losses tripled in the fiscal first quarter to $6.6 million.

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Mesa Air Group Inc. is once again considering replacing its go! fleet with larger aircraft -- possibly 90-seat CRJ-900s -- after incurring more than $26 million in losses in its Hawaii operations.

The Phoenix-based carrier, which disclosed in a Securities and Exchange Commission filing that go!'s losses tripled in the fiscal first quarter ended Dec. 31, has been operating in the islands with four 50-seat CRJ-200s, with a fifth one kept as a spare.

"We've been moving away from the 50-seaters to larger aircraft due to our airline partners, and that's something we're considering for go! as well," Ornstein said. "There's currently a large backlog of orders for large regional jets, and the soonest we could see that is in the spring of '09. We'd be talking about an April delivery."

Go! has been adding seasonal flights to its schedule and plans to increase capacity even further for the summer, Ornstein said.

In July 2006 -- one month after go! debuted in Hawaii -- Ornstein said Mesa hoped to bring larger regional jets to the islands no later than the end of 2007.

But in January 2007, Ornstein said plans to bring in the 90-seat aircraft in time for the summer season were pushed back because of a limited supply of the planes and demand for them from Mesa's flying partners.

Now, Ornstein is looking at that possibility again.

"We still operate over 100 50-seaters, but our partners are looking for larger aircraft," he said. "That trend is because the economics are so much better with larger aircraft. We've talked in the past about doing the same thing in Hawaii, and it's certainly something we're considering because of the more efficient operations of a larger aircraft."

Ornstein said February "is trending very well" for go! after a lean January in which go! attracted the fewest number of passengers (43,763) and filled the lowest percentage of seats (58.36 percent) in its short history.

"The load factors (percentage of seats filled) and yields have been improving in February," he said.

In Thursday's SEC filing, go! reported that it lost $6.6 million in its fiscal first quarter, up from a loss of $1.9 million in the year-earlier quarter.

Revenue fell 8.2 percent to $6.2 million from $6.7 million after the airline reduced capacity and offered 12.5 percent fewer available seat miles.

Go!'s maintenance costs rose $2.7 million over a year ago because the carrier went through its heavy engine checks, as well as sea checks, during the quarter.

"A big chunk of our maintenance for the year came in that quarter," Ornstein said.

Fuel costs rose about $900,000 before taxes, Ornstein said.

"If you take out the impact of fuel and extra maintenance, go!'s loss for the quarter was about the same as it was a year ago," Ornstein said.

Go! also spent $800,000 on promotion and sales during the quarter, according to the filing.

And Mesa, the parent company, spent $500,000 on legal expenses related to go! in the defense of a federal lawsuit filed against Mesa by Hawaiian Airlines.

Mesa has posted a $90 million bond and is appealing a decision by a federal Bankruptcy Court judge that Mesa misused confidential information to gain a competitive advantage in entering the Hawaii market in June 2006. So far, Bankruptcy Judge Robert Faris has ordered Mesa to pay $83.9 million in damages and legal fees.

On Thursday, Mesa reported that it lost $4.2 million in its first quarter. In fiscal 2007, Mesa lost $81.6 million.