THE CHAIRMAN and chief executive of Scottish Government-owned ferry operator David MacBrayne have highlighted the retention of the contract for the Clyde and Hebrides service as the driver of its improved financial performance in the year to the end of March.

Although David MacBrayne subsidiary CalMac Ferries has operated the service, which connects mainland Scotland with islands including Arran, Barra and Islay, since 2006, last year it faced stiff competition from private company Serco when the £1 billion contract came up for retender.

However, after committing to 350 service improvements CalMac was ultimately successful with its bid and its new eight-year contract began on October 1 last year.

According to chief executive Martin Dorchester this was a key highlight in a year that saw the business increase its turnover by £5 million to £195.5m at the same time as turning a £4.8m pre-tax loss into a £4.8m pre-tax profit.

“At the core of our activities over the past 12 months has been preparation for the new Clyde and Hebrides Ferry Service contract, based on our submission for the tender,” Mr Dorchester said.

“Confirmation that CalMac Ferries will continues as the main ferry operator across Scotland’s west coast through to 2024 has been warmly welcomed by staff and customers alike, and we are keen to ensure their expectations of us and ferry services are met.”

Chairman David McGibbon said that as the business had made a “firm commitment to continuous improvement over the life of the contract” there would be “positive change in just about every part of our business” over the next seven years of the contract.

“We know that our customers and Transport Scotland, who awarded the contract on behalf of the Scottish taxpayer and the island and rural communities we support, would expect no less of us and they can be assured of our desire to meet every one of our bid commitments,” he said.

“Some of that change is already evident with the roll out of ticketing and other service enhancements such as the provision of Wi-Fi in all ports and on all ships. We look forward to delivering the rest of our planned changes.”

Mr Dorchester said thanks to the changes already made the business had been able to return £2.8m to the Government by way of a “contract clawback”.

David MacBrayne, which also operates the Argyll Ferries business that runs a service between Gourock and Dunoon, operates a 33-vessel fleet and in the 2016/17 year carried a total of 5.3 million passengers and 1.3 million cars. In the previous year the fleet carried five million passengers and 1.2 million cars.

Mr McGibbon said that while the Scottish Government is currently reviewing whether it needs to tender for ferry services David MacBrayne’s “sights are firmly set” on winning the Gourock to Dunoon contract, which is up for retender soon.

That service is far less valuable to the business than the Hebrides and Clyde one, generating just £5.5m of total revenue in the 2016/17 year. Of that figure £839,000 came from fares and £3.6m from the Government.

On the Herbides and Clyde route the company generated £60m in fares and received £128m in subsidies.

Staff numbers at the business rose from 1,568 to 1,658 year on year, resulting in a £6m increase in staff costs from £70.3m in 2015/16 to £76.4m.

Mr Dorchester’s paypacket for the year increased from £160,000 to £194,000 - an rise of 21 per cent - while the amount David MacBrayne paid into his pension rose from £32,000 to £37,000.

Service delivery director Robbie Drummond, meanwhile, saw his remuneration package rise by 17 per cent from £145,000 to £170,000 and his pension contribution increase from £28,000 to £32,000.