Qantas Airways, Australia's biggest carrier, will look to expand capacity on international routes as demand recovers amid "positive signs" in the previous quarter, chief executive Alan Joyce said.

"We're seeing an improvement in the US route," he said, adding: "When we see the market returning - which it is starting to return, as I said, in the last quarter we started seeing positive signs there - we will look at growing international markets, as we have in domestic."

Joyce said last week bookings had risen since July 1 as domestic and Asian corporate travel rebounded from the global recession. He expects new domestic and international routes to support leisure travel in his budget unit Jetstar, limiting the impact of rising domestic capacity.

The airline expects "materially stronger" earnings in the December half as it sells more profitable seats and benefits from an efficiency drive that reduced costs by A$533 million ($674 million) in the past 12 months, the first year of a three-year plan. The Sydney-based company controls about 90 per cent of the local market for corporate and government travel.

Cameron McDonald, a Melbourne-based analyst at Deutsche Bank, affirmed his "buy" rating on Qantas shares in a note to clients on Friday and increased the price forecast 9.4 per cent to A$2.90.

"We continue to be encouraged by the apparent momentum associated with premium travel recovery," McDonald wrote.

Joyce said yesterday that Qantas' "Australia to Los Angeles services are getting close to breakeven again".

"That's a big improvement on where it was previously," he told ABC.

- BLOOMBERG