Virgin Australia posts highest HY profit in decade on strong domestic market

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, 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% revenue jump in the quarter ending March 31, pushing its shares up 10.3% to a three-month high. Virgin posted underlying pre-tax profit, the most closely watched measure, of A$112.3m for the six months ended Dec. 31, compared with A$81.9m a year ago. The airline had guided for a profit of at least A$100m and overcame A$88.2m in fuel and foreign exchange headwinds during the half. Revenue in Virgin's domestic business, which accounts for nearly two-thirds of its sales, grew 10.3%, thanks largely to higher fares, the airline said. Virgin has been looking to build on recent improvements in its balance sheet and domestic business and to turn around its international and low-cost divisions, both of which remained loss-making in the first half as its international division raised capacity to Hong Kong and New Zealand.<br/>