For the second time in a little more than three years, Aloha Airlines has sought bankruptcy protection.

The state's No. 2 carrier yesterday filed for Chapter 11 reorganization in U.S. Bankruptcy Court, listing assets and liabilities both in excess of $100 million.

Aloha blames discount-carrier go! and its parent, Phoenix-based Mesa Air Group, and said the bankruptcy filing aims to protect the carrier and the jobs of its 3,500 workers.

"It's a travesty and a tragedy that the illegal actions of a competitor and other factors beyond our control have forced us to take this action," said David Banmiller, Aloha's CEO, in a statement.

"Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha," Banmiller said.

Mesa's chief executive, Jonathan Ornstein, declined comment yesterday, citing the pending lawsuit between the two companies.

The bankruptcy filing is not expected to increase interisland airfares, which have dropped by nearly half to about $49 since the June 2006 entry of go!

Aloha will likely continue to match the low interisland fares offered by go! and Hawaiian Airlines to remain competitive.

"This has been a war of attrition since the day Mesa entered the market," said Peter Forman, a local aviation industry historian and author of the 2005 book "Wings of Paradise: Hawai'i's Incomparable Airlines."

"But Aloha has been up against the ropes before. They've always come back. Don't count them out yet."

Gov. Linda Lingle expressed concern for Aloha and its employees and said her administration will monitor the situation.

"I am very concerned about the 3,500 employees who have sacrificed a lot over the years," Lingle said in a news release.

"I am hopeful that this action will allow Aloha Airlines to successfully emerge from reorganization as they have done in the past."

Hawaiian Airlines said Aloha's bankruptcy underscores the tough operating environment local carriers now face. "It's extremely challenging and marked by high operating costs, record-high fuel prices and a very competitive pricing structure," said Hawaiian CEO Mark Dunkerley.

In a news release yesterday, Aloha said its operations were also hurt by the recent run-up in petroleum prices, which hit a record of $111 a barrel last week.

Under current prices, the carrier's aviation fuel costs will increase by about $71 million a year.

For the first nine months of 2007, Aloha lost more than $58 million, according to filings with the U.S. Department of Transportation.

That's up sharply from the losses of $41.5 million in 2006 and $18.4 million in 2005. Figures for the fourth quarter of 2007 are not yet available.

Aloha's bankruptcy comes as its cash balances have declined in recent months. According to DOT filings, Aloha had $28.8 million in cash to finance its daily operations at the end of the third quarter, down from $33.8 million at the beginning of the year.

Aloha said it is seeking court approval for new financing from its principal lender, General Motors Acceptance Corp., to pay its daily operating costs.

A hearing on the motion is likely today.

WORKERS SURPRISED

News of Aloha's bankruptcy filing shocked employees, retires and customers.

Several airline workers contacted last night at Honolulu International Airport said the company had not yet informed them of the bankruptcy. One former employee, retired pilot Steve Brenessel, said he was worried that his benefits might get cut.

Brenessel was among the many pilots and former pilots who unsuccessfully fought the company's efforts to terminate workers' defined-benefit pensions during Aloha's previous bankruptcy.

"I'm as surprised as anyone else," said Brenessel, who retired in 2004 after 14 years with the company. "I had no clue this was coming."

Founded in 1946, Aloha is the state's second-largest carrier, with 3,500 employees.

The airline operates more than 700 interisland flights a week and more than 120 weekly flights to the West Coast.

The company filed for bankruptcy protection in December 2004 after fuel prices began to soar.

It emerged from reorganization in February 2006 under new ownership led by California billionaire Ron Burkle and former football star Willie Gault.

Since then, it has strengthened its position by adding United Airlines as an investor and by naming former Continental Airlines CEO Gordon Bethune as its chairman.

In its bankruptcy petition yesterday, Aloha listed assets and liabilities of $100 million to $500 million.

SUING MESA

Aloha said it owed money to 1,000 to 5,000 creditors. The largest unsecured creditors include the U.S. Transportation Security Administration, which is owed more than $7.5 million, and United Airlines, which is owed $5.5 million.

Among other unsecured creditors are the Hawaii Medical Services Association, which is owed about $2 million, and the state of Hawai'i, which is owed $1.3 million.

A listing of Aloha's larger secured creditors, including banks and aircraft lessors, will likely be made later.

The bankruptcy comes as Aloha is suing go! for misusing confidential information to try to drive it out of business. Aloha has alleged that Mesa used proprietary records to launch go!

A similar lawsuit by Hawaiian Airlines resulted in an $80 million judgment against Mesa.

In that lawsuit, Hawaiian's lawyers disclosed e-mails in which Mesa's chief financial officer at the time, Peter Murnane, stated: "We definitely don't want to wait for (Aloha) to die, rather we should be the ones who give them the last push."

Ornstein previously denied that Mesa attempted to drive Aloha out of business. Ornstein testified that his company attempted to invest $20 million in Aloha.

Aloha's suit will go to trial in October.

"If Aloha wins their lawsuit, the damages are going to be enormous," said Forman, the aviation industry historian. "Mesa doesn't have enough money to pay those damages."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.