Qantas has reported a record half year profit of A$921 million (NZ$1.069b) for the past six months, boosted by A$448 million in fuel savings.
The result means Qantas' 2015 calendar-year performance was the best in its 95-year history.
The airline said every part of its group contributed strongly to the result, with record underlying profits for Qantas Domestic, the Jetstar Group and Qantas Loyalty.
Revenue increased by 5 per cent to $8.5 billion, while total unit costs were down by 7 per cent compared with the first half of last year.
The $2 billion Qantas Transformation programme - in which thousands of jobs are going - is reshaping the group into a more "agile and innovative business."
In the six months to December 31 the group unlocked A$261 million in cost and revenue benefits through transformation initiatives.
The airline said it has saved $1.36 billion in total benefits now realised since 2014.
Qantas secured a first-half benefit of $448 million through fuel hedging, which enabled it to buy fuel at lower prices.
"We are securing greater benefits from lower fuel prices than our competitors because of our disciplined approach to hedging," said chief executive Alan Joyce.
"This record result reflects a stronger, leaner, more agile Qantas."
Considering the position Qantas International was in just a few years ago, this turnaround is remarkable.
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He said without a focus on revenue, costs and balance sheet strength, today's result would not have been possible.
"Both globally and domestically, the aviation industry is intensely competitive. That's why it's so important that we maintain our cost discipline, invest to grow revenue, and continue innovating with new ventures and technology."
Joyce said the lower Australian dollar was driving an inbound tourism surge, and smarter aircraft utilisation had enabled Qantas International to respond with more capacity, especially on strong Asian and North American routes.
The performance had been bolstered by three cornerstone partnerships - with American Airlines, China Eastern, and Emirates.
Qantas International achieved underlying earnings of $270 million, a four-fold improvement.
"Considering the position Qantas International was in just a few years ago, this turnaround is remarkable," he said.
The strength of our performance and balance sheet means we can continue to reward our shareholders for their confidence in our business.
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Qantas domestic continued to re-balance capacity from the resource sector towards east coast business and premium leisure markets. Its underlying earnings were up 70 per cent to $387 million.
The Jetstar group reported record underlying earnings of $262 million, an improvement of $181 million.In line with the Group's financial framework and commitment to enhance long-term shareholder value, the Qantas Board has approved an on-market share buy-back of up to $500 million.
The buy-back will start in early March.
"The strength of our performance and balance sheet means we can continue to reward our shareholders for their confidence in our business," Joyce said.
The airline announced capacity increases on Christchurch-Brisbane route.
From June 18, it would fly three times per week between Christchurch and Brisbane all year round and a fourth weekly service during school holiday peaks.