Troubled airline Loganair has revealed a rise in turnover, profits and passenger numbers despite struggling with recent poor performance and slumping passenger confidence.
Turnover rose 7% to £93.6million while profits soared 23% to £7.2million in the year to the end of March 2015. During the same period, passenger numbers rose 13%.
This is despite being dogged by technical problems and poor reliability in recent months as critics called on the airline to invest some of its profits in improving its service.
Loganair chairman David Harrison said the company had “significantly increased” its annual investment programme to £15million.
“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,” Mr Harrison said.
“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.”
In recent weeks the company has faced a series of technical issues causing serious delays and in some cases the need for emergency landings. Late last year the British Airline Pilots Association warned that the airline was attempting to fly “unserviceable” planes, a claim which the Civil Aviation Authority (CAA) has dismissed.
At the time, the company said it was facing an “unusually high number of people retiring or moving on from our engineering division”.
Yesterday the Scottish airline said it 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”.
Loganair chief executive Stewart Adams said that its “unique route mix” meant it had five different aircraft models from four different manufacturers.
He said that “significantly increases the demands on our engineering department and when engineers move on or retire, it has traditionally had a major impact on operations”.
According to the company’s accounts, the firm benefited from an insurance payout on one of its Saab340b aircraft that was written off after it veered off the runway in Stornoway during takeoff. It said the insurance proceeds”exceeded the net book value” of the aircraft allowing it to book a profit of £1.68million. However, breaking an expensive fuel hedge struck when oil prices were much higher than they are now cost the firm £1.52million – albeit its new contracts benefit from “lower prevailing market price”, it said.
The company paid out a £7.67million dividend to owners Airline Investments limited.
Loganair is a franchise partner of low-cost airline Flybe, flying “lifeline” routes to all the smaller airports in the Highlands and islands on behalf of the Exeter-based airline.
Shetland MSP Tavish Scott said: “Profits up, turnover up, passenger numbers up yet reliability is down. The everyday experience of many Shetlanders travelling south has been disrupted by engineering problems and technical issues.
“I want Loganair to invest any money they make in sorting reliability. Islanders must have confidence that the service will fly and fly on time. That has not been the case for too many months.
“Loganair’s decision to invest in engineers, a new spares facility, plus refurbishing the Saab 340s is good but long overdue. The sooner this gets underway the better for everyone who uses Shetland’s lifeline air services.”