PHOENIX — With its $20-million-a-month Delta Air Lines contract in jeopardy, Mesa Air Group Inc. wants shareholders to allow the carrier to issue up to $37.8 million in common stock to pay off its looming debt.

The amount is more than the total market value of the Phoenix-based commuter airline.

Mesa said in a securities filing that it will ask shareholders at the company's annual meeting May 13 to approve the plan to issue new stock so it can repay senior convertible notes in June.

Mesa offered the convertible notes in 2003 to raise $100.1 million. The notes aren't due until 2023, but holders can force the company to repurchase the notes on June 16, 2008.

"The company is preserving its options regarding the payment obligations" on those notes, Mesa General Counsel Brian Gillman said in an interview.

Robert Mann, an independent airline analyst in Port Washington, N.Y., said this could be a reliable way to raise cash, especially with banks increasingly reluctant to loan airlines more money.

"There's just not an appetite to extend further credit to airlines," Mann said.

Mesa told shareholders in the securities filing that it needs the flexibility to pay bondholders with stock. Forcing it to use cash right now "would have a material averse effect on the company's financial condition," the company said.

The airline recently has been roughed up by a series of bad news that's drained its cash reserves.

Mesa's new subsidiary go!, an inter-island airline in Hawaii, sparked a price war among competing carriers and reported a $20 million operating loss in the first 16 months of operation.

Last October, a federal judge ordered Mesa to pay $80 million to rival Hawaiian Airlines Inc. after determining that a Mesa executive intentionally destroyed evidence related to a lawsuit filed by Hawaiian. Hawaiian claimed the evidence would have shown the launch of go! was aided by Mesa's misuse of proprietary information it gathered as a potential investor during Hawaiian's bankruptcy.

In March, Delta Air Lines Inc. said it planned to pull a contract-flying agreement worth $20 million a month with another Mesa subsidiary, Freedom Airlines. Delta said Freedom's carriers had a poor flight completion rate, but Mesa disputes that claim.

hey're suing the carrier to keep the contract intact.

Mesa's shares rose 9 cents, or 7.3 percent, to $1.32 Tuesday.