February 3, 2017 / 12:30 AM / 8 months ago

Virgin Australia second-quarter earnings slide 37 percent in tough market

A rainbow from a passing rain shower sits over Virgin Australia aircraft at Sydney's Airport in Australia, August 5, 2016. REUTERS/Jason Reed/File Photo

SYDNEY (Reuters) - Virgin Australia Holdings Ltd (VAH.AX) on Friday posted a 37 percent fall in second-quarter underlying earnings before taxes as tough conditions persisted in the domestic aviation market.

Australia’s second-biggest airline reported an underlying profit before tax of A$45.9 million (28 million pounds) for the quarter ended Dec. 30, compared with an underlying profit before tax of A$73 million a year earlier.

On a statutory basis, including restructuring charges associated with a cost-savings programme, it reported a profit before taxes of A$13.1 million.

The second quarter is typically the most profitable of the year for the airline. Virgin will report first-half results later this month, but the figure released on Friday indicates underlying earnings of A$42.3 million before tax given it lost $A3.6 million in the first quarter.

Virgin in November said it would “actively manage” capacity due to subdued conditions in the domestic market, where it competes against Qantas Airways (QAN.AX).

Virgin’s domestic capacity rose by 1.6 percent in the quarter ended Dec. 31, but it cut the number of flights by 5 per cent as it removed E190 aircraft from its fleet. That meant some flights had been switched to larger Boeing 737 aircraft.

The airline did not comment on the performance of its international division.

Reporting by Jamie Freed; Editing by G Crosse and Matthew Lewis

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