LOGANAIR has lifted profits by nearly 40 per cent to more than £6 million in its latest financial year, as the Scottish airline optimised routes and benefited from increased oil and gas activity west of Shetland.

Profits leapt as the privately-owned airline, which serves destinations across the Highlands and Islands and south of the Border under the Flybe franchise, enjoyed record passenger load of 65.8 per cent in the year ended March 31.

Turnover edged up to £87.5m, from £86.9m, as passenger numbers grew by 4.9 per cent to 576,750.

Executive chairman David Harrison said the business, which employs 550 staff across Scotland, took steps to optimise its network and become "better at selling seats" over the period.

He said: "We have got more passengers on the routes which are in demand and we have taken one or two routes which perhaps were not doing so well out of the network.

"That improves the overall mix, because then you have effectively got more of your routes being sold and your flying becomes more efficient."

The profit progress at Loganair, which came a year after it hiked profits by 24 per cent to £4.4m, came despite a £1m exceptional cost.

This was linked to the introduction of three 50-seat Saab 2000 aircraft, and reflected the cost of training pilots, engineers and cabin crew to operate the planes.

Loganair said the additional planes had added capacity to selected scheduled routes and boosted its non-scheduled business, with oil and gas activity west of Shetland leading to growing demand for flights to Sumburgh and Aberdeen.

Mr Harrison said: "There has been significant growth in passenger numbers to Shetland and we have benefited from that.

"Secondly, we have been doing more chartered business where we have been providing aircraft specifically to oil companies. That is opposed to the scheduled service where they book a seat on a flight that is going anyway.

"We have been doing a line of business where the likes of Total, Chevron or a number of other companies will actually contract with us and take a dedicated aircraft."

Loganair, which shares some routes with British Airways, noted it had successfully renewed two contracts with Royal Mail during the period after a long tendering process.

It said freight activity was now concentrated in Inverness, which it indicated is improving the efficiency of the operation.

The company's last financial year did not benefit from new routes, but it will see a contribution this year from new flights from Edinburgh to Norwich and Dundee to London Stansted, which were added two days before financial year end. It is also about to take over a Glasgow to Manchester route.

Mr Harrison said the deal with Flybe, which commenced in 2008, is working well with both parties.

He said: "We've been at it six years now and it is really a rolling indefinite agreement we have with them.

"It really will continue as long as it suits both parties, and it does suit both parties well."

Loganair, which was sold by Scott Grier to Stephen and Peter Bond in 2012, said it had made capital investments totalling £3.9m over the year. That included moving its headquarters from near the runway at Glasgow Airport to the Cirrus building outside the airport.

Mr Harrison, who explained the airline's 28-strong fleet were a mix of owned and leased aircraft, said he hopes to add further Saab 2000 planes in the current year. He said: "Ideally we'll find one or two more and we might well buy those. We like to keep the mix between lease and purchase. It's a big investment to make that changeover. The good news is we have done that now."