VIRGIN Australia Holdings Limited (ASX: VAH) has reported an underlying profit before tax of $55.3 million for the second quarter of the 2015 financial year.
This result represents a $47.6 million improvement on the prior corresponding period, with the company believing the benefits from falling oil prices will continue to assist with further growth during the second half of the year.
VAH chief financial officer Sankar Narayan says the result is a turnaround on the seasonally weaker first quarter, where the company reported a $45 million underlying pretax loss.
"We are delivering on our plan to maintain our cost advantage through the disciplined execution of our cost reduction program, while continuing to drive revenue growth from the Corporate, Government and Charter Market segments," says Narayan.
"These cost reduction benefits are being realised while we continue to improve the customer experience."
He says the company continues to witness some improvement in domestic trading conditions.
"However consumer sentiment has been relatively weak and international yield recovery has been constrained by continued pressure in the South East Asian and Europe/United Kingdom markets," says Narayan.
VAH reported an increase in domestic capacity by 1.4 per cent compared from the previous year, while the percentage of seats filled in the domestic market fell by 0.4 percentage points to 78.1 per cent in the second quarter.
In addition, VAH announced today it has acquired the remaining 40 per cent stake of Tiger Airways Australia and as a result, now owns and controls 100 per cent of the company.
As part of the acquisition, Virgin has secured the brand rights to fly Tigerair to a number of short-haul international destinations.
Virgin says this will provide further growth opportunities and additional flexibility for the business.
"The completion of this acquisition marks the next phase of Tigerair Australia's evolution in the Australian market and represents an important step in its pathway to sustainable profitability," says Narayan.
"We remain focused on maintaining Tigerair Australia's low cost business model and a separate brand, while ensuring there is a viable low cost alternative in the market for consumers."
Tigerair reported a $500,000 profit in the second quarter, up from a $15.5 million loss in the first quarter.
The partnership between Virgin and Tigerair will continue through brand licensing and certain services which will continue to be provided by Tiger Holdings to Tigerair Australia.
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