Mesa Air Group, the parent company of interisland carrier go!, reported a 38.3 percent drop in profits in the most recent quarter as fuel costs and other expenses rose faster than revenue.

Mesa said it earned $8 million, or 20 cents per share, during the three months ending Dec. 31, 2006. The company earned $12.9 million, or 31 cents per share, in the year-earlier period.

The company said it spent $117 million on fuel in the quarter, up from $104 million a year ago.

In June, Mesa launched go! featuring one-way fares at $39 or less. go!'s fares were nearly half what other airlines were charging at the time.

Aloha Airlines and Hawaiian Airlines matched go!'s fares, although both have sued Mesa, claiming it engaged in unfair business practices. Aloha also commissioned a study that concluded interisland airlines lose money if they sell seats for less than $50.

Mesa, which operates 201 aircraft and flies to 170 cities, did not break out results for go!