Interisland carrier go! has slipped back into the red—three months after posting its first profit.

Phoenix-based Mesa Air Group said yesterday that its nearly 3-year-old Hawaii airline suffered a $2.1 million loss in its fiscal second quarter that ended March 31 as competition from Mokulele Airlines' new jet service reduced go!'s yield from the previous quarter.

“;Clearly, the entrance of a third carrier has caused market conditions to deteriorate,”; Mesa Chairman and Chief Executive Jonathan Ornstein said yesterday after an earnings conference call.

However, Ornstein said go!'s load factors, or percentage of seats filled, continue to run in the low 60s.

“;We feel ultimately go! will be a profitable operation for us as it was in the prior quarter,”; Ornstein said on the conference call.

Go!s revenue in the second quarter jumped 33.7 percent to $9.6 million from $7.2 million a year ago as a result of a 20.1 percent increase in passengers and a 4.3 percent increase in average fares on its five 50-seat CRJ-200s.

Operating expenses decreased 24.4 percent to $11.7 million from $15.5 million a year earlier. Jet fuel accounted for 18.3 percent of go!'s operating expenses versus 25.7 percent in the year-earlier period.

In its fiscal first quarter, go! had an operating profit of $893,000—nearly double the $500,000 go! initially reported last February before its subsequent filing with the Securities and Exchange Commission. That was go!'s first profit after 10 straight losing quarters dating back to the airline's inception in June 2006.

In the fiscal second quarter of 2008, go! lost $8.3 million.

Ornstein said after yesterday's conference call that he is planning on bringing in a sixth CRJ-200 in June to add additional service for the summer season for the same major interisland routes that go! serves.

In addition, Ornstein said go!'s new code-share with Island Air that began March 25 is exceeding the numbers produced by go!'s previous code-share with Mokulele. Go! severed ties with Mokulele after it formed a partnership with Indianapolis-based Republic Airways.

“;Our partnership with Island Air has gotten off to an excellent start,”; Ornstein said. “;We're booking Island Air passengers through our Web site, and we've seen a 40 percent increase in passenger traffic over what we had been carrying with Mokulele.”;

Ornstein said Mesa is “;still very focused”; on its Hawaii operations and said that Mesa is better off using its CRJ-200s in the islands as opposed to putting them in storage.

“;We're ahead of where we would be if the aircraft were just parked and not in service,”; he said.

He said jet fuel prices have been creeping up in the current quarter that ends June 30 but that go! is still ahead of the company's financial projections for the year.

Overall, Mesa swung to a loss last quarter of $36.7 million, or 42 cents a share, from a year-earlier profit of $9.4 million, or 29 cents a share. However, the company would have been profitable last quarter had it not recorded a $64.5 million income tax expense primarily due to a tax provision affecting carry-forwards of net operating losses. The tax expense was a result of Mesa issuing new shares recently to retire or restructure bonds.

Excluding the tax expense and a $539,000 loss from discontinued operations, Mesa had a pretax operating profit of $27.2 million.

Revenue fell 27.3 percent to $233 million from $316.8 million a year ago.

Mesa said it ended the quarter with $57.1 million in cash, including $14 million in restricted cash, and that it foresees building its cash position for the remainder of the year. Mesa had $64 million in cash as of Dec. 31.