Qantas, Australia's struggling flag carrier, on Thursday unveiled a hefty pre-tax loss and said it would axe 5,000 full-time jobs, sell older aircraft and slash capital spending in the face of growing competition.
The airline, one of Australia's most iconic brands, issued a profit warning in December and has been seeking some form of assistance from the government.
Qantas, known as the 'flying kangaroo,' said it had a first-half underlying loss before tax of A$252 million ($224 million). That was at the bottom end of an A$250 million to A$300 million loss range Qantas warned that it would report.
"There are big changes taking place at Qantas, and undoubtedly big changes are needed," said Peter Harbison executive chairman at the CAPA Centre Aviation in Sydney.
"Everything that Qantas does will probably have to be changed next year to keep up with what's going on," he added. "Three or four new carriers from Southeast Asia are looking to come into Australia. These sorts of issues are going to require some flexibility."
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Qantas shares fell more than 6 percent to a two-week low in early Australia trade after the earnings release.
At a news conference, Qantas CEO Alan Joyce described the results as "unacceptable" and said: "We're facing some of the hardest decisions we've had to make."
The airline said it would defer receipt of the final three Boeing 787 Dreamliner jets it ordered for budget arm Jetstar and the eight remaining Airbus A380s it has on order. This is part of a plan to either defer or sell a total of 50 aircraft.
Qantas said it has also agreed to sell a lease it owns at Brisbane airport, raising A$112 million in cash.
(Read more: Has the tide turned for corporate Australia?)
Worst case scenario
"It [the job cuts] is the worst case scenario when you see that there are about 29,000 jobs here in Australia. 5,000 job cuts are a very big number," Linda White, assistant national secretary at Australian Services Union," told CNBC.
Qantas has said that rival airline Virgin has access to foreign funding, through its shareholders Gulf carrier Etihad, Singapore Airlines and Air New Zealand, putting the Australian flag carrier at a disadvantage.
Australia's government said on Tuesday it was looking at ways to help Qantas and analysts say it has three options: An outright bailout, repealing the Qantas Sales Act which essentially prohibits foreign ownership of the airline and a state-backed loan.
The government is reluctant to hand cash out to struggling corporates and at the same time it faces opposition in parliament to making any changes to the Qantas Sales Act.
"When Qantas was privatized it had severe restrictions on the nature of foreign ownership. That was 20 years ago and a lot has changed since then," said CAPA's Harbison. "That puts Qantas at a disadvantage to Virgin and I think that [the sales act] has to go but the trouble is the government is up against an opposition."
Kelvin Thomson, a Federal Labor Member of Parliament, said the job losses at Qantas were not a justification to change the Qantas Sales Act.
"If you do that, that amounts to selling Qantas to a foreign corporation and that means we will lose it. It will no longer be Australian and it will no longer be ours," he told CNBC.
— Writing by CNBC's Dhara Ranasinghe. Follow her on Twitter at @DharaCNBC