Loganair reports £15m investment

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Air service provider to the Western Isles Loganair has released its annual results revealing that turnover in the year to March 31 2015 increased from £87.3m to £93.6m.

The rise is thanks in part to a 13% rise in passenger numbers on scheduled services to 656,036.

The company, which operates 31 routes across the Scottish Highlands and Islands and the rest of the UK, increased profits to £7.2m from £5.8m the previous year.

Loganair chairman David Harrison revealed that the company has significantly increased its annual investment programme to £15m.

He said: “2015 was a challenging year but we have a very robust and comprehensive plan to further improve our fleet and enhance the comfort of our passengers.

“It is our number one priority and from April 2015 to April 2016 we have committed more spend than we have ever done to achieve those ambitions.”

The £15m investment programme includes:

£4m on the purchase of two 50-seater Saab 2000 aircraft

£1.5m to buy a 31-seater Dornier 328 turboprop

£3.5m to begin a three-year programme of major passenger upgrades for the workhorse of its fleet, the Saab 340, significantly improving journey comfort and convenience

£6m investment in a new spares hub at Glasgow Airport which will carry the most regularly-used parts – allowing far faster and more efficient servicing and repairs.

In addition, Loganair has invested heavily in its engineering operation, and now employs 146 engineers, more than at any time in its history, and almost twice as many as in 2007.

Chief executive Stewart Adams said: “Unlike most airlines worldwide, which benefit from the efficiencies of operating only one aircraft type, our unique route mix means we have five different models from four different manufacturers.

“This significantly increases the demands on our engineering department and when engineers move on or retire, it has traditionally had a major impact on operations.

“Therefore, engineering recruitment and training has been a major focus in the current year and we will also shortly be launching an apprenticeship programme, aimed at identifying and training our own young engineers at a time of a global skills shortage in the aviation industry.

Punctuality target

“Our punctuality figures for all flights departing within 15 minutes of schedule currently sits at 77% – which is still higher than the UK industry average - but we have set a target of 85% for 2016 as we deliver the benefits of our investments.”

The passenger load factor - an industry term used for the measurement of how full aircraft are during flights - was down slightly on the previous year’s all-time high of 64% - but with a 26% increase in seat capacity due to the introduction of the larger Saab 2000 aircraft, this is a good result.

During the year three new routes were added outwith Loganair’s traditional Highlands and Islands heartland - Norwich to Edinburgh, Dundee to London Stansted and Glasgow to Manchester. Subsequently, two months ago, two more routes linking Inverness to Manchester and Dublin were launched.

In September this year Loganair introduced a compassionate fare policy, thought to be the first of its kind from a UK commercial airline, which offers a 50% fare reduction and free, improved booking flexibility to eligible passengers faced with sudden bereavement or the unexpected critical illness of an immediate family member. This fare policy has been introduced to help people when they need it most.

Dividends totalling £7.67m were paid to parent group Airline Investments Ltd (AIL) to enable it to fully repay loans taken on to finance its purchase of Loganair in 2012.

David Harrison added: “We started the new financial year in a position of strength, and look forward to pursuing our strategy of controlled expansion in both our scheduled service network and our dedicated long-term charter contracts.

“As well as the acquisition of another Saab 2000 and the new expanded spares hub, having two dedicated spare aircraft based at Glasgow and Aberdeen enables us to improve back-up capability across the network.

“These investments are all designed to significantly improve operational performance and we are confident they will each have a positive effect on service levels.”