As it forecast a couple of weeks ago, Virgin Blue returned to profitability in the first half of 2009-10 and maintained annual earnings guidance.
Australia’s second airline yesterday reported a net profit of $62.5 million for the six months to December 31.
That was better than the $58 million Qantas reported last week on an after tax basis.
A small achievement, it’s come in a very tough period, but its a milestone for the airline.
That was a turnaround from a $101.4 million loss for the previous corresponding period, which Virgin Blue pointed to in an update on February 2.
The company said underlying operating profit before tax was $80.1 million, up from $60 million.
And Virgin Blue maintained its guidance for an underlying pre-tax profit for the full year of between $80 million to $110 million.
"However, while the board and management are of the view that the group is well positioned to take advantage of an improving market, they remain alert to the pace of the global economic recovery and the continuing competitiveness in domestic and international markets," it said in a statement on Wednesday.
"As previously advised, seasonality and competitive activity in the domestic market will put continued pressure on yields for the remainder of this year.
"Revenue grew 12.2% to $1.52 billion for the six months, up from $1.35 billion for the equivalent past reporting period.
"Total operating expenses were $1.41 billion, up just 4.5% on the prior year."
The underlying profit before tax excluding cash flow hedges, derivatives and V Australia start-up costs was $75.6 million, up 34%.
Group chief executive, Brett Godfrey, said in the statement favourable fuel price movements had helped the result but he was also proud that the group had achieved a decrease in the cost per available seat kilometre, excluding fuel, of 4.5%t.
"Any way you cut it, to continue to achieve cost reductions while we continue to grow our business and position it to rapidly and fully exploit any improvement in economic conditions demonstrates the remarkable commitment of each and every one of our team members and the resilience of our model," he said.
"We have a seasonal business and our traditionally busiest part of the year is the December first half – that and ongoing strong price competition will likely see pressure maintained on yield improvement for the remainder of this year," he added.
A reduction in the average price paid for jet fuel of 27.5% to $US92 per barrel delivered $115 million in cost savings.
Virgin Blue said its short haul domestic and non-domestic business achieved a pre-tax profit of $108 million, up 126%.
For long haul markets, total revenue was $117 million with a load factor averaging 80.8%.
V Australia (which is running across the Pacific) carrier delivered a pre-tax loss $39 million
"V Australia is however meeting expectations and will see a noticeable improvement in the in second six month period, despite the fact it is seasonally the poorer half in the year," Virgin Blue said.
"Guidance previously given that V Australia would be profitable within 18 months of launch remains valid."
The carrier did not declare an interim dividend, saying it was prudent not to issue one at this time.
In that it shared the same thinking at Qantas which omitted an interim to shareholders.
The shares eased 1 cent to 61 cents yesterday.
