LOGANAIR made a pre-tax loss of nearly £9 million in the last financial year as it went head to head with Flybe on routes to and from the Northern Isles.
The company said that the cost of competing with its old franchise partner Flybe was £6.8 million.
Both airlines reduced their ticket prices on routes to and from the Northern Isles, but seats were regularly left empty due to an over-provision of flights.
The airline added that the cost of ‘flying solo’ when its franchise with Flybe ended in September was £2.98 million.
It set up a new reservations system and rebranded its planes as part of the process.
The airline also said that delays in codeshare agreements and travel agency booking channels going live resulted in a loss of bookings, costing £2.09m.
Loganair said that if these costs were taken out of the equation, there would have been an underlying pre-tax profit of £2.95m.
Turnover was up seven per cent to £110.7 million, with passenger numbers rising by 6.2 per cent to a record 812,541.
However, the percentage of seats filled fell from 62.8 per cent to 59.8 per cent.
The percentage of flights operating on time – departing within 15 minutes of schedule, the industry standard – was 77.9 per cent, ahead of the UK average.
Loganair chairman David Harrison said that the airline “is now on the front foot and ready for a successful year ahead”.
Referring to the figures, however, he said that “the fact that we forecast last year that we would be loss-making in 2017/18 makes it no less painful”.
Managing director Jonathan Hinkles added: “Prices on the competed routes fell to unsustainable levels, so we faced the double impact of carrying fewer customers at significantly reduced average fares.
“But within two months of it beginning, 70 per cent of customers on the competed Highlands and Islands routes were flying Loganair and I’m proud that we experienced that brand loyalty.”
Loganair said that new ramps will be introduced in the Highlands and Islands to aid disabled access, while it also expects new oil and gas charters.