Mesa Air Group Inc., faced with millions of dollars in annual lease payments for dozens of idled aircraft, attempted for two years to lower its expenses.

But with large payments coming up this month, no place to deploy its excess aircraft and more planes scheduled to go offline in the next four months, the Phoenix-based carrier gave in to the inevitable and filed for Chapter 11 early yesterday in federal Bankruptcy Court for the Southern District of New York.

“;It's not like we have a business that doesn't work,”; Mesa Chairman and Chief Executive Officer Jonathan Ornstein said. “;We have a business that works, but unfortunately we have assets that we can no longer utilize.”;

Mesa called the long-rumored bankruptcy a “;financial restructuring”; and said it was necessitated by 52 excess aircraft that it has parked and has been unable to put into service, as well as 25 additional planes that will be coming out of service in the next four months from United Airlines after the latter carrier failed to extend an operating agreement.

Despite the bankruptcy filing, the company said it doesn't need any additional financing and stressed that operations will continue as normal, including in Hawaii, where Mesa operates go! and is the 75 percent owner of the go! Mokulele joint venture. Go! Mokulele operates as a separate entity and was not part of the reorganization.

Ornstein said go! Mokulele will continue operating during the restructuring and that all passenger tickets will continue to be sold and honored, all terms and conditions governing tickets purchased will remain the same, and the frequent-flier program will remain intact.

Go! Mokulele operates five 50-seat CRJ-200s and flies up to 60 flights a day from Honolulu to Lihue, Kahului, Kona and Hilo. The company also operates four nine-seat Grand Caravans to smaller island airports.

Airline analyst Bob McAdoo said Mesa isn't alone in having excess aircraft.

“;People have a number of surplus airplanes, and as the big airlines have shrunk their systems, they've shrunk their mainland routes in terms of capacity, and that means they need fewer seats in the smaller markets, as well,”; said McAdoo, of Prairie Village, Kan.-based Avondale Partners LLC.

For Mesa, which operates as a regional carrier for United, Delta Air Lines and US Airways Group, it got squeezed to the point where it had nowhere to turn.

“;They've been working with their creditors to get an arrangement put together away from Bankruptcy Court for quite a while, and when it was clear they weren't going to get it, the logical thing was to go this way,”; McAdoo said.

Island Air Chairman Charlie Willis, whose airline is a code-share partner with Mesa as well as with Hawaiian Airlines, supported the bankruptcy filing.

“;As fuel prices have increased, 50-seat aircraft have become less economical,”; Willis said. “;The company has a whole bunch of those types of airplanes (systemwide), making it increasingly more difficult to become profitable. I think it's a prudent move to do what they did. I think in the long run it will make them a stronger company, but in the meantime it will be difficult.”;

In its filing, Mesa, which has 130 aircraft in its fleet, listed assets of $975 million, liabilities of $869 million and revenue of $968 million as of the end of its fiscal year on Sept. 30. It estimated its total number of creditors as 5,001 to 10,000, with Wells Fargo Bank being the largest unsecured creditor with an unknown claim amount. The second-largest creditor is aircraft manufacturer Bombardier Inc. at $133 million, with another aircraft manufacturer, Embraer, being owed $42 million.

The company's common stock, which likely will be wiped out in the reorganization, plunged 53.8 percent, or 6.4 cents, to 5.5 cents yesterday on the Nasdaq.

“;This process will allow us to eliminate excess aircraft to better match our needs and give us the flexibility to align our business to the changing regional airline marketplace, ensuring a leaner and more competitive company poised for future success,”; Ornstein said.

Ornstein said Mesa has eliminated more than $160 million in debt through negotiations with its lessors, creditors and other constituents, yet “;we are nonetheless faced with an untenable financial situation resulting primarily from our continued lease obligations on aircraft excess to our current requirements.”;

In court yesterday, Bankruptcy Judge Martin Glenn approved Mesa's request to pay 15 fuel suppliers between $1 million and $1.3 million a week and approved other motions allowing the airline to pay employees and key vendors and continue customer programs. However, Glenn denied Mesa's request to abandon the 20 idled Beechcraft 1900Ds leased from Raytheon Aircraft Credit Corp., which is owed $33.6 million, and scheduled a hearing for Tuesday to consider the motion.

The airline said the reorganization will allow it the opportunity to reach a more timely conclusion in its litigation with Delta. In that case, Mesa is seeking in excess of $70 million in damages after Delta attempted to terminate a regional flying contract with Mesa over flight-performance issues. Subsequently, Mesa obtained a preliminary injunction stopping the termination, Delta appealed the ruling and the case is heading for trial.

Mesa, a low-cost carrier that at one time dropped one-way interisland fares to a rock-bottom $1, has had a rocky existence — and only one profitable quarter — since debuting in Hawaii on June 9, 2006.

In April 2008, Mesa paid Hawaiian Airlines $52.5 million to settle a lawsuit brought by Hawaiian alleging Mesa had misused confidential information obtained during Hawaiian's bankruptcy in 2004 to enter the Hawaii market in 2006.

And in November 2008, Mesa settled a 2007 lawsuit with Yucaipa Cos., Aloha Airlines' former controlling shareholder, in which Aloha accused Mesa of misusing confidential information that Mesa obtained as a potential investor during Aloha's bankruptcy. Aloha also accused Mesa of predatory pricing designed to run Aloha out of business. Mesa paid Yucaipa $2 million and issued Yucaipa 10 percent of Mesa's common stock.

By that time, Aloha, which had filed for its second bankruptcy on March 20, 2008, was out of business, calling it quits 11 days later.