Virgin Australia swung to a first-quarter underlying profit before tax of $8.5 million from a $45 million loss in the year-earlier period as it benefited from higher domestic fares and a turnaround at low-cost carrier Tigerair Australia. 
The airline's yields, or returns on fares, were positive in the domestic market and on the group level during the period. However, yields at its struggling international division further declined as it works to revamp those operations, in part by replacing some Virgin flights to Bali with low-cost arm Tigerair from   March.
On a bottom line level, Virgin reported a $1.7 million profit, up from a $59.1 million loss a year earlier. The   September-quarter profit was affected by an ineffective hedging effect of $9.1 million.
Chief executive John Borghetti reaffirmed the airline's forecast of returning to profitability for the full financial year with a return on invested capital in line with its cost of capital. Analysts expect the carrier to report an underlying pretax profit of around $145 million, compared with its $49 million underlying loss before tax last year.
"In   August, I said we were on a sustainable trajectory," Mr Borghetti said. "We are continuing on that trajectory. That is in line with our plan."
Tigerair reported its first   September quarter profit, with earnings before interest and tax of $400,000, which compared with a loss of more than $20 million in the same period last year. The positive result was driven by significant improvements in revenues as well as cost cutting.
Virgin did not own all of Tigerair in the   September quarter last year, meaning on a like for like basis, its overall underlying pretax earnings were a $73.3 million improvement.
In its quarterly financial report, Virgin also provided its operating statistics for the   September quarter. Unlike rival Qantas, it no longer reports the figures to the market on a month by month basis.
The Virgin statistics showed the carrier has been struggling to fill its seats despite cutting capacity. Virgin reduced its domestic capacity by 0.7 per cent but its load factor, or the percentage of seats filled, still fell by 2.5 percentage points to 74.7 per cent. In contrast, Tigerair increased its capacity by 9.9 per cent but its load factor fell by 4.6 percentage points to 85.6 per cent.
In the international market, Virgin filled 84.8 per cent of seats, up from 83.1 per cent the prior year, but its lower yields indicated it cut fares to do so.
Macquarie Equities analyst Sam Dobson said the Virgin results were a "positive read through" for Qantas given capacity levels in the domestic market remained rational. He has a "neutral" recommendation on Virgin shares.