Virgin Australia says conditions in its key domestic market remain subdued up after posting a $28.3 million statutory net loss for the three months to March 31 2015.
The statutory result was an improvement of $74.8 million from the prior corresponding quarter of 2013/14, Virgin said in a statement on Friday.
Virgin Australia chief financial officer Sankar Narayan said the third quarter performance was a “significant year-on-year improvement” as the company sought to reduce costs and attract more high-paying passengers from the corporate sector.
“While consumer sentiment remains subdued and the international operating environment continues to be challenging, we are seeing a sustainable recovery in our domestic business,” Narayan said in a statement.
“We have delivered continued growth in our corporate and government revenue and a significant improvement in the performance of Tigerair Australia.”
On an underlying basis, which removes one-off costs and was regarded as a better indication of financial performance, Virgin reported a loss before tax of $22.2 million, which was a $61 million improvement from the prior corresponding period.
Virgin said yields across both the airline group and in the domestic market “continued to improve and were positive compared to the third quarter of the 2014 financial year”.
Meanwhile, cost per available seat kilometre declined in the third quarter “both including and excluding fuel and the impact of Tigerair Australia.
The company said it was still on track to receive a $50 million benefit from lower fuel prices over the second half of 2014/15.
Virgin said its fully-owned low-cost subsidiary Tigerair Australia posted an underlying profit before tax of $500,000 for the quarter, up from a $25 million underlying loss a year earlier.
“This result was driven by continued improvement in unit revenues and cost efficiencies,” Virgin said.
In the three months to March 31, Virgin reported a flat capacity growth in the domestic market terms of available seats, while the number of passengers carried on its Australian network fell 2.2 per cent. As a result, load factors declined 2.1 percentage points to 74.3 per cent.
There was strong capacity growth at Tigerair Australia however, with available seat kilometres (ASK) rising 18.7 per cent in the quarter, while the passenger numbers rose 17.5 per cent. Load factor rose half a percentage point 85.7 per cent.
Virgin has moved to quarterly reporting of its financial results, in line with one of its major shareholders Singapore Airlines (SIA).
SIA, which accounts for Virgin’s financial performance in its own quarterly reporting, was due to publish its latest results on May 14.