Virgin Australia Holdings nearly doubled earnings in its domestic division in the first half of the financial year as a result of its ability to charge 9.1 per cent more for the average airfare as it attracted more corporate and government business. 
The airline, which last week had revealed an eightfold rise in first-half underlying earnings to $81.5 million, reported underlying earnings before interest and tax (EBIT) of $130 million in its domestic division, up from $69.7 million a year earlier.
Virgin's revenue per available seat kilometre rose by 7.1 per cent in the domestic market, which is far higher than the 1.5 per cent rise Credit Suisse expects from rival Qantas Domestic.
Virgin said it remained on track to meet its target of 30 per cent of domestic revenue from the corporate and government market by the end of financial year 2017.
On Thursday, Virgin disclosed plans to dispose of five of its 18 Embraer E190 jets by   September, with the flying to be covered by increased use of its Boeing 737 fleet in a move that will help cut costs.
Virgin's international division, which took a hit from volcanic activity in Bali during the first half, remained loss-making. Virgin's international underlying EBIT loss was $30.8 million, which was better than the $39.5 million loss a year earlier.
Low-cost arm Tigerair Australia reported a major turnaround, with underlying EBIT of $13.9 million in the first half, compared with a $24.8 million loss the prior year. The average fare on Tigerair rose by 12 per cent.
"The group has strengthened the fundamentals of each of the businesses through the half and is in a better position for sustainable growth," Virgin chief executive John Borghetti said.
On a bottom line basis, the airline reported a $62.5 million profit in the first half, up from a $47.8 million loss in the same period the previous year. The airline said the lower fuel price only contributed a net $33.8 million to its results after accounting for the weaker Australian dollar.
Virgin had already revealed its half-year results figure last week as part of a   December quarter market update, but it did not disclose more detailed figures like revenue and yield growth at the time. Virgin also disclosed a $133 million first-half cash outflow on Thursday, with working capital hit by increased receivables from corporate travel agents and reduced forward sales based on lower second-half international capacity as it changes the seating in its Boeing 777 fleet.
Deutsche Bank analyst Cameron McDonald last week said the $81.5 million underlying profit figure was below his expectation of $85.8 million, while Citi analyst Anthony Moulder had expected an even higher $95.5 million.
"We see the weaker-than-expected results to be a function of the impact of the volcanic disruption on Bali traffic, and the lower cargo earnings as management invest in repositioning this business," Mr Moulder said after the   December quarter announcement was made.