Jetstar, the discount unit of Australia's Qantas Airways, achieved its first underlying profit in New Zealand after boosting passenger numbers and ramping up competition with dominant carrier Air New Zealand.

Qantas's Jetstar Group reported earnings before interest and tax profit of A$230 million in the year ended June 30, turning from a year earlier loss of A$116 million, the Sydney-based airline said in a statement.

Qantas didn't break out earnings for Jetstar's New Zealand unit, but said operations were profitable for the first time.

The Australian airline has increased rivalry Air New Zealand by forging a closer alliance with American Airlines, adding thousands of extra seats to its trans-Tasman services in early spring, and plans to extend its New Zealand domestic services to four regional destinations in December.

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Qantas is the middle of the largest business transformation programme in its history in a bid to return to profitability.

Today the airline reported an annual profit of A$557 million, from a loss of A$2.8 billion the previous year.

In a presentation accompanying the airline's annual results, Qantas said it planned to "continue to build a strong challenger brand" for its Jetstar New Zealand unit.

Chief executive Alan Joyce has previously said he sees "substantial value" in the Jetstar airlines that will be realised over time, particularly from Asian markets, though it won't embark on any new ventures until its transformation programme is completed.

The Australian airline plans to return 23 Australian cents per share to investors through a A$505 million share consolidation. The board didn't declare a dividend.

On the ASX, Qantas shares last traded at A$3.76 and have gained 57 per cent since the start of the year. On the NZX, Air NZ rose 0.4 per cent to $2.67 and have gained 7.7 per cent since the start of the year.