Flybe split sees Loganair tumble into the red

Loganair has plunged almost £9 million into the red following the break-up of its franchise agreement with Flybe and subsequent competition.

The cost of the Glasgow-based airline “flying solo” again brought a bill of about £3m, while delays in newly-negotiated codeshare agreements with partner airlines and travel agency booking channels going live led to a £2.1m bill.

Most damaging of all, Loganair noted, was the announcement by Flybe that it was entering a new franchise agreement with Eastern Airways and would compete head-to-head on six routes.

Despite the turbulence, Loganair booked record turnover of £110.7m, a rise of 7 per cent. Passenger numbers were up 6.2 per cent to an all-time high of 812,541, but the load factor – the percentage of seats filled on scheduled flights – fell from 62.8 per cent to 59.8 per cent, due to the overcapacity on routes with Flybe competition. Just under 78 per cent of flights ran on time.

Chairman David Harrison said: “This year’s results bring to an end 17 consecutive years in profit for Loganair, and the fact that we forecast last year that we would be loss-making in 2017/18 makes it no less painful.

“The extent of the loss is a direct result of competition on six of our eight largest routes, and from the outset we maintained that the markets on these routes were simply not big enough to sustain the level of seat capacity being introduced. This indeed proved to the case.

“However, these costs are non-recurring, and Loganair is now on the front foot and ready for a successful year ahead.”

Managing director Jonathan Hinkles added: “In a challenging year, I’m delighted to say that the transition from franchise partner to an airline operating in its own right was completed on schedule.

“In the last 12 months we have transformed our operation with wholesale changes to our reservations, revenue accounting and check-in systems.

“We have carried out a full rebrand, repainted our aircraft in tartan livery, introduced new crew and ground staff uniform, brought in a comprehensive system of service improvements for our customers and launched a significant sales and marketing programme.

“I’m equally pleased to be able to report that the response from our customers to these developments has been extremely positive.”