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End franchise deal proves costly

Price war sees Loganair plunge to first loss in 17 years

Loganair: hit be end of franchise deal


 

Scottish airline Loganair made a pre-tax loss of £8.93 million in the year to end March following the end of its franchise agreement with Flybe.

It left the airlines competing directly on six routes, including five in the Highlands and Islands, and plunged the two operators into a price war which cost Loganair £6.8m.

Without the non-recurring items linked to Flybe, Loganair would have recorded an underlying pre-tax profit of £2.95m.

It has spent £2.98m re-establishing its own brand and back-office functions. Delays in code-sharing agreements with new business partners cost a further £2.09m.

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.”



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