Loganair to reduce annual loss despite pandemic
Loganair expects to resume scheduled services next month
Loganair expects to report a lower loss in the current financial year than in the previous 12 months despite the impact of the Covid-19 pandemic.
New income from contract and charter flying, a rigorous focus on costs and support from government schemes will help to ‘significantly narrow’ its losses.
Services will resume on several routes during April, with others following through May and June, it confirmed today.
These will include the re-launch of services on several former Flybe routes linking Scotland and the north of England with Southampton, Exeter and Newquay.
The company, now Britain’s biggest regional airline, reported a loss before tax of £12.7 million in the year to the end of March last year of which nearly £3m was attributable to the onset of the COVID-19 pandemic in the final month.
It was also a result of a re-valuation of fuel and currency contracts as required under accounting standards as well as a charge of £7.5 million associated with the retirement of older aircraft – and a loss of £2.1 million arising from the industrial dispute by air traffic controllers at HIAL airports which ran through most of the year.
Turnover grew from £120 million to £169m during the year as it phased out its older Saab 2000 and Dornier 328 turboprops and introduced next-generation ATR turboprop aircraft to its fleet.
Jonathan Hinkles: trading ahead of forecast
CEO Jonathan Hinkles was unable to provide estimated figures for the current year ending 31 March 2021 but said “the magnitude of loss will be significantly less than in 2019/20.”
He said “the forecasts at the time of re-financing were for a small loss aside from the currency and fuel hedging contracts, and we’re trading just slightly ahead of that.”
On staff numbers, he said: “We have 746 employees today and have had no further redundancies beyond the position outlined in the 2019/20 accounts as filed, which was 30 voluntary redundancy/early retirements and 58 involuntary redundancies.
“Where employees wish to do so, we’re keeping in touch through an “alumni” group to afford them priority of re-hiring if and when recruitment recommences in future. There is a possibility of some recruitment later this year if further new contract awards on which we’re working come through.”
The airline stepped in following the failure of Flybe in March last year to maintain the Isle of Man’s lifeline air services; has converted aircraft to fly COVID-19 patients for the Scottish Ambulance Service; has maintained regular passenger and mail services throughout the Highlands and Islands, and has continuously flown scheduled and charter services at Aberdeen to support essential travel in the oil and gas industry.
“The last 12 months have placed an extraordinary burden on everyone, yet we are incredibly proud of the efforts which Loganair’s team has made to continue delivering for the communities that we serve,” said Mr Hinkles.
“In addition to our long-standing duties and responsibilities in the Highlands and Islands, we’ve also added new contracts in the oil and gas industry, and stepped in to safeguard 16 routes following the collapse of Flybe.
“We’ve flown record volumes of mail and cargo through our route network as well, highlighting the increased capacity of our new ATR72 freighter aircraft.”
To ensure that its financial foundations are secure for the future, Loganair was an early adopter of the UK Government’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) in July 2020.
The airline agreed a £25 million loan facility with Clydesdale Bank and owners Stephen and Peter Bond simultaneously agreed a package of support amounting to £11m over two years.
“This comprehensive re-financing enables Loganair to look to the future with confidence,” said Mr Hinkles. “As the UK’s vaccine programme continues apace, we are already seeing modest signs of a recovery in bookings on domestic routes for the year ahead.
“Although we have a long way ahead of us on the path to recovery, the support of our team, our shareholders and our lenders is truly appreciated and integral to our future success.”