Qantas back in black with $367m profit turnaround

Qantas has reported a big financial turnaround today - with a $A367m profit for the six months to the end of 2014.

Deep restructuring is largely behind Qantas returning to profit just six months after reporting one of its worst ever annual losses.

The airline yesterday reported a A$367 million underlying profit before tax for the six months to December 31, sending its shares up close to 5 per cent in early trading.

In the prior corresponding period the airline reported a loss before tax of A$252 million.

The airline is attributing the dramatic turnaround to cost cutting - in which 5000 jobs will go - improved yields and passenger loads in its domestic and international businesses, the positive impact of reduced depreciation expenses, the removal of the carbon tax, the lower Australian dollar and fuel prices.

"We wouldn't be making any money without transformation," said chief executive Alan Joyce.

Unit costs dropped 4.8 per cent and revenue increased by 2.1 per cent to A$8.1 billion.

While lower fuel costs contributed about A$33 million to the improved performance in the first half, one analyst says it could save up to A$500 million for the remainder of the financial year.

The underlying profit result is Qantas' best since the first-half performance in 2010 but it will not pay a dividend and intends paying back A$1 billion of debt.

The group's statutory profit after-tax of A$203 million is a massive turnaround on a statutory loss of A$235 million a year ago.

See Air NZ video: Cheaper fares could be coming

Qantas International was profitable for the first time since the global financial crisis, with underlying earnings of A$59 million representing a turnaround of A$321 million.

Increased fleet utilisation enabled the international arm to add capacity to destinations including Los Angeles, Dallas/Fort Worth, Vancouver, Santiago, Honolulu and Auckland. Capacity will grow across the network by up to 2 per cent this year, including some extra seasonal flying to New Zealand.

In the domestic market, Qantas and Jetstar reported combined pre-tax earnings of close to A$300 million as the capacity war with Virgin Australia abated.

The resurgence of Qantas is providing more intense competition for Air New Zealand on routes where they compete and will be a factor in more discounted air fares in the coming year.

Qantas shares closed up 4c yesterday at A$2.85.

Australia cuts back promotion

Tourism Australia is scaling back on brand promotion in New Zealand because Kiwis have got the message and they don't spend as much as other visitors. The Australian Government and private sector-funded organisation has cut its Auckland office from about five staff to one as it redirects marketing of Australia around the world. The organisation is chasing value, rather than volume.