Australian flag carrier Qantas has bounced back into the black as aggressive cost-cutting and its alliance with Emirates helped slash losses at its troubled international arm.
The airline posted a profit of A$5-millionin the 12 months to June 30, a major improvement on the historic A$245-million loss the previous year, when soaring fuel costs and industrial action hammered the bottom line.
Its underlying profit before tax - the airline's preferred measure of financial performance - was A$192 million, up from A$95 million 12 months ago.
Revenue inched up 1.1 percent to A$15.9-billion, with earnings boosted by a A$125-million settlement it received from US-based Boeing after putting back delivery of its 787 Dreamliner jets, which have suffered lengthy production delays.
"The market is very tough. But we are focused on the elements we can control," said chief executive Alan Joyce as the carrier reversed its first annual loss since privatisation in 1995.
"We have Australia's leading airlines and loyalty business - and we have a clear strategy to build an even stronger business for the future."
The group's international division continued to struggle, posting a loss of A$246-million.
But that compares with a loss of A$484-million the previous year, signalling Joyce's strategy of scrapping less profitable routes, expanding into Asian markets and hooking up with Dubai-based Emirates is paying dividends.
"We have made considerable progress with our turnaround plan for Qantas International and we remain on track towards our target for the business to return to profit in FY15," he said.
Under the Emirates alliance, Qantas has shifted its hub for European flights to Dubai from Singapore, which Joyce said had given the group a strengthened position on routes to Europe, the Middle East and North Africa.
"Bookings have been very positive, running at about twice the level of Qantas's previous codeshare arrangements for flights to Europe," he said, adding that the full benefits were expected to flow from 2015.
"We have reduced Qantas International's cost base by five percent, having withdrawn from loss-making routes, retired ageing aircraft and completed the reconfiguration of nine Boeing 747s and all 12 of our A380s, resulting in improved fleet economics."
He added that the group's focus "remains squarely on making Qantas International a competitive and sustainable business that can ultimately grow again".
Virgin, whose major shareholders include Singapore Airlines, Etihad and Air New Zealand, recently completed the purchase of a 60 percent stake in low-cost Tigerair Australia to boost its rivalry with Qantas.
While Qantas did not deliver any forward guidance "due to the high degree of volatility and uncertainty in the competitive environment, global economic conditions, fuel prices and foreign exchange rate", Joyce remained upbeat.
"Our financial position has been strengthened by the actions we have taken over past 12 months: reducing debt, extending our maturity profile and taking a prudent approach to capital expenditure," he said.
"We have also continued our policy of selling non-core assets where appropriate.
"Our focus remains on building long-term shareholder value. We will continue to be disciplined in managing capital expenditure and costs, while improving the customer experience and engaging our people to provide the best possible service."