Loganair has a charter for growth as Scots airline’s profits take off

LOGANAIR, the Scottish airline that serves the Highlands, islands and beyond, yesterday landed a double-digit rise in profits after more charter work and freight flights boosted margins.

The Paisley-based carrier won a third postal contract from Royal Mail and has carried out an increased amount of work for the oil and gas industry.

Workers have been ferried from Ireland to Shetland to build a gas processing plant for Total near Sullom Voe, while Chevron personnel have also been carried between Aberdeen and Lerwick.

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Total passenger numbers fell 6.6 per cent year-on-year to 487,460, which the airline blamed on heavy snow during the winter and the Icelandic volcanic ash cloud closing UK airspace in April and May 2010.

Seat occupancy edged up from 61.7 per cent to 63.2 per cent, the highest since the airline was re-launched in 1997.

But chairman Scott Grier warned that the firm was not immune to the downturn in consumer spending and that he was seeing passenger numbers coming under pressure.

He told The Scotsman: “Scheduled flights always have been and always will be at the core of our business and we’re seeing a lot of customers in the Highlands and islands having less money to spend on flights because of the economic downturn.

“But we’ve been diversifying the business and I’m pleased to say that the increase in cargo and charter work has really helped.”

Pre-tax profits soared 12 per cent to £2.8 million in the year to 31 March – the 11th year in a row that the carrier has been in the black – on the back of a 2.5 per cent increase in turnover to £60.5m.

The airline, which can trace its roots back to 1962, remains debt-free, with £4m of cash on what Grier described as its “strong” balance sheet. But the chairman added that he would consider taking on bank debt to make further takeovers.

In July, Loganair bought Cambridge-based Suckling Airlines, a business once owned by Stagecoach chief executive Sir Brian Souter and which carries out charter flights for politicians, business travellers and football clubs including Chelsea, Newcastle United and Norwich City.

Grier said: “There’s nothing magical about having no debt. But it has helped us to sleep more easily during the banking crisis. We’ve been sensible and retained a lot of our profits to fund our growth and acquisitions, such as Suckling.

“The integration of Suckling has gone well and I’m very pleased with the loyal its customers have shown.”

Grier also backed yesterday’s calls from British Airways, EasyJet, Ryanair and Virgin Atlantic for the Chancellor to scrap any proposed increases in air passenger duty, a tax applied when passengers book seats.

“We’ve been fighting this for a long time,” explained Grier. “Some of our routes are exempt from the duty and others just attract the lowest rate of £12. But it’s still an extra cost.

“The devolved government in Northern Ireland has had to stomach the cost of paying the duty for Continental on its flights from Belfast to New York but I’m not sure the Scottish Government would want to do the same.”