An intense fares war on island routes plus costs of going it alone is set to see
Loganair making a loss this year.
The airline’s owner is lending the firm £3 million over the rough patch on top of
a £6 million bank overdraft facility.
Despite a record £103 million of ticket sales and plane charters pre-tax profits
fell by 11% from £3.6 million in the year up to last March.
Passenger numbers also increased over the period.
The current financial year will be much worse as the fares battle with Flybe is biting
deeply says the Paisley based company.
Flybe shocked Loganair by setting up as a rival on island schedules after their long
term franchise agreement ended in September.
David Harrison, Loganair’s chairman, said: “As a result of the re-branding, start-up
costs of new contracts and the advent of competition on a number of routes from September
2017, Loganair expects to be loss-making in the 2017/18 financial year.
"To safeguard our ongoing programme of investment, existing facilities with Clydesdale
Bank have been renewed, and Loganair’s shareholders have advanced a £3 million loan.”
Competition from Flybe under a joint venture with Eastern Airways has reduced ticket
prices on the Stornoway - Glasgow link by up to 40% with around 27% more people using
the route than before.
Loganair braced for financial turbulence with £9 million refinancing package