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Virgin Australia posts highest half-year profit in a decade

Singapore

VIRGIN Australia Holdings Ltd posted its best half-year profit in a decade on Wednesday and forecast higher revenue in the current quarter on the strength of its domestic business and forward bookings.

The Australian domestic aviation market is largely a duopoly between Virgin and larger rival Qantas Airways Ltd, both of which have increased fares and boosted domestic earnings by cutting capacity.

Virgin beat its own earnings guidance for the first half and forecast a 7 per cent revenue jump in the quarter ending March 31, pushing its shares up 10.3 per cent to a three-month high. Qantas shares also rose 3.7 per cent, the biggest gainer in the benchmark index as investors counted on the brighter outlook for the Australian domestic travel business to boost earnings across the board.

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Virgin posted underlying pre-tax profit, the most closely watched measure, of A$112.3 million (S$108.3 million) for the six months ended Dec 31, compared with A$81.9 million a year ago. The airline had guided for a profit of at least A$100 million and overcame A$88.2 million in fuel and foreign exchange headwinds during the period.

Revenue in Virgin's domestic business, which accounts for nearly two-thirds of its sales, grew 10.3 per cent, thanks largely to higher fares, the airline said.

The airline declined to provide full-year earnings guidance due to broader market uncertainty. On a statutory basis, including one-off gains and losses, profit rose to A$73.8 million, a sizable jump from A$4.4 million a year ago. REUTERS