Virgin Australia is clawing back its losses after the capacity war with Qantas

Graham Denholm/Getty Images

Virgin Australia has reduced its losses with the gradual recovery of its domestic airline business with smaller costs and better returns per passenger.

The airline reported an underlying loss of $22.2 million for the March quarter, a $61 million improvement. The statutory loss was $28 million compared with $103 million.

Virgin is getting better passenger yields after the end of the capacity war with Qantas. Virgin is now competing more on service, this month announcing all its flights would have free luggage and food.

Qantas also announced better yields, assisted by a gradual increase in airfares and flying with fewer empty seats.

Virgin Chief Financial Officer Sankar Narayan said the result was driven by a strong performance on costs and continued success in attracting higher yielding market segments.

“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.

Virgin’s Tigerair Australia recorded an underlying profit of $0.5 million for the quarter, an improvement over a $25 million loss.

Virgin Australia are trading lower by almost 1% at $0.505.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.