The interisland fare war is taking its toll on the bottom lines of airlines, raising the question of how long they can continue to sell $39 tickets.

Aloha Airlines said it lost $8.5 million in the fourth quarter 2006. The parent of go! airlines, Mesa Air Group, reported a net loss of $24 million for the second quarter, its first quarterly loss since the Sept. 11 terrorist attacks.

Aloha blamed its loss in part on the drop in interisland fares. Mesa said go!'s earnings came in under projections as its competitors increased capacity on their interisland routes.

Since go! starting flying last June, one-way interisland fares have dropped to as low as $19, with most fares now priced at around $39. The financial results appear to support a recent study by Aloha's consultants that concluded interisland airlines lose money on all seats priced below $50.

"Market conditions in Hawai'i resulted in lower yields and as a result go!'s operating results were $700,000 below plan," Mesa said in a news release.

Aloha spokesman Stu Glauberman said, "Results for the fourth quarter and full year reflect challenges posed by the continuing high cost of fuel and a decline in average interisland fares."

On May 2, Hawaiian Airlines reported a $11.9 million loss in the first quarter.

Hawaiian and Aloha have sued Mesa, alleging it is attempting to unfairly drive them out of business.

Aloha's $8.5 million loss in the fourth quarter wasn't as bad as the $10 million loss it suffered in the third quarter of 2006.

But Aloha's operating revenues declined 5.4 percent to $94.7 million in the fourth quarter from $99.8 million the previous quarter, according to a filing with the U.S. Department of Transportation yesterday. Overall expenses were down 7.9 percent to $101.7 million from the third quarter's $110.4 million.

Although fuel costs declined slightly, they remained a relatively large segment of Aloha's overall costs. The airline said its jet fuel costs totaled $22.7 million during the fourth quarter, compared with the previous quarter's $28.5 million.

Aloha announced earlier this month that United Airlines is acquiring a minority stake in the local carrier. In the noncash deal, the two airlines also agreed to expand their marketing and operational ties.

Founded in 1946, Aloha is the state's second-largest airline, with about 3,500 employees. The company filed for Chapter 11 reorganization in December 2004 and emerged from bankruptcy protection in February 2006 under new ownership led by California billionaire Ron Burkle's Yucaipa Cos LLC.

In the case of Mesa, the bulk of its losses came from its Mainland operations. Flight cancelations due to bad weather hurt its United Express regional carrier, which it flies on a contract basis for United Airlines. Profits from United Express were down $4.7 million during the quarter.

The company said its quarterly results were affected by $23.4 million in noncash charges from United Express and Delta Connection regional service. Minus the charges, the company said it would have earned $4.5 million, or 13 cents per share.

The second quarter loss compares with a gain of $5.3 million in the same quarter a year earlier. On a per-share basis, Mesa reported a net loss of 54 cents in the three months ending March 31, 2007, compared with net income of 14 cents per share in the year-earlier quarter.

The quarterly loss was the first for Mesa since 2001 when earnings of many airlines suffered as a result of the Sept. 11 terrorist attacks.

Shares of Mesa rose 8 cents yesterday to close at $6.77 per share on the Nasdaq market.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.