Cost-cuts and fuel dip see airline make profit

Virgin Australia's passenger numbers rose 1.5 per cent from a year earlier.

Virgin Australia is once again making a profit after cutting costs, carrying more passengers and reaping the benefits of falling fuel prices.

Virgin made a net profit of A$11.3 million ($11.9 million) in the three months to December, and an underlying pre-tax profit - a measure the airline industry sees as a clearer indication of performance - of A$55.3 million. After incurring a loss in the first three months of the 2014/15 year, that takes the airline to a half-year underlying pre-tax profit of A$10.3 million.

That compares to a A$50 million loss in the same period a year earlier.

Chief financial officer Sankar Narayan said Virgin Australia's second quarter performance represented a continued turnaround for the airline.

"We are delivering on our plan to maintain our cost advantage through the disciplined execution of our cost-reduction programme, while continuing to drive revenue growth from the corporate, government and charter market segments," he said.

Domestic trading conditions were improving, but consumer sentiment has been relatively weak, and its international operations are being constrained by pressure on revenues in the Southeast Asia and Europe and UK markets, Mr Narayan said.

Rival Qantas has also forecast an improved performance, expecting to have returned to underlying profitability in the first half of 2014/15.

Virgin Australia realised a benefit of about A$7 million from lower fuel prices in the three months to December, compared to 12 months earlier. It carried about 5.25 million passengers in the three months to December, up 1.5 per cent from a year earlier. But its number of seats was up 1.8 per cent from a year ago to 6.7 million.

The company's low-cost airline Tigerair Australia made an underlying pre-tax profit of A$500,000 in the December quarter - an improvement from an underlying loss of A$15.5 million a year earlier.

Tigerair's first quarterly profit in four years came on improved revenues and costs, Virgin Australia said.

Virgin Australia shares were up 1c, or 2.25 per cent, at A45.5 cents. It will report its finalised half-year results on February 19, while Qantas will report on February 26.

- AAP