Loganair expects financial loss

Loganair has revealed it expects to make a loss over the current year – after taking a financial hit following its split with Flybe.

The Scottish airline has cited rebranding, start-up costs and competition on routes from to and from Shetland as reasons for the projection.

Loganair went its separate ways with Flybe in September, with a battle for passengers and a reduction in air fares meaning some return trips from Shetland fell below £100.

In December Flybe announced it would be pulling out of the Shetland routes as of 8th January.

The decision came weeks after Loganair managing director Jonathan Hinkles warned that the route was not big enough for two providers.

Flybe said that after a detailed review into the Sumburgh services operated by Eastern Airways on their behalf, the companies made a joint decision to end all flights to and from Shetland.

Disappointing passenger numbers and fares tumbling by between 20 and 40 per cent were connected to the decision.

Loganair added that competition had driven fares down to unsustainable levels and caused heavy losses for both airlines.

This week Loganair said it had taken financial steps “to safeguard our ongoing programme of investment” and had taken an advance £3m loan for shareholders.

The company said its costs included a new reservations system and bookings website to support “own-brand activity”, along with a customer contact centre at its headquarters at Glasgow Airport.

It reported that pre-tax profits fell by 11 per-cent, to £3.06 million, for the year ended 31st March 2017.

There was an eight per-cent increase in turnover to £103 million, while passenger numbers increased by 8.6% to an all-time high of 765,091.

A total of 62.8 per-cent of seats were filled on scheduled services.

Punctuality increased over the period, with 80% of flights departing within 15 minutes of schedule.

And after securing long-term charter contracts with oil and gas operators, including Fairfield, Shell and Total, Sumburgh is its busiest airport after Glasgow.

It also cited a new, bigger, five-year contract with Royal Mail among its highlights.

Mr Hinkles said Loganair had made “a successful transition from franchise partner to operating under our own brand”.

He said: “We now have the freedom to implement new initiatives to make travel more convenient and affordable for our customers, and we have abolished credit card payment surcharges, introduced earlier opening of online check-in and removed ID checks at boarding gates.

“We have also re-launched a code-share agreement with British Airways, connecting our passengers to short and long-haul flights, and entered into an agreement with EasyJet, which allows our flights to be marketed on that company’s website.”

The airline said it was also “in the early stages” of a long-term plan to replace its fleet.

It wants to reduce the range of aircraft it uses to simplify its engineering operations.

The company is also close to completing the remodelling of the interiors of its 12 Saab 340s, the 34-seater workhorse of the airline’s fleet.