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Qantas reports first-half profit as turnaround strategy gathers speed

Australia's Qantas Airways on Thursday reported its best first-half profit in four years as its cost-cutting program bore fruit and lower oil prices trimmed fuel expenses.

Qantas said underlying profit before tax, the most closely watched measure, was A$367 million ($289 million), overshooting its own forecast in December of a profit between A$300 million and A$350 million. The result reflects a faster-than-anticipated recovery following last year's record A$2.8 billion net loss.

Qantas Airlines Boeing 747.
Adam Jeffery | CNBC
Qantas Airlines Boeing 747.

"We are meeting or exceeding all our targets as we build a sustainable future for Qantas," Chief Executive Officer Alan Joyce said in a statement.

Shares in the so-called "Flying Kangaroo" have rebounded by almost 200 percent from an all-time low of A$0.95 in December 2013. They closed on Wednesday at A$2.81.

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All the company's operating segments were profitable in the six months to Dec. 31. The troubled international division was profitable for the first time since the global financial crisis, with underlying earnings before interest and tax (EBIT) of A$59 million.

Joyce said the outlook had improved for the group as a whole for the second half of the year with overall demand stable, a moderation in domestic and international market capacity and stabilising yield and load factors.

Qantas said all operating segments were expected to be profitable for the full year and it plans to increase capacity by 1.5 percent to 2 percent in the second half. Full year underlying fuel costs are expected to be capped at A$4 billion.

The airline did not provide a full-year profit forecast, citing a high degree of volatility and uncertainty in global economic conditions, fuel prices and foreign exchange rates.

Qantas had struggled in recent years thanks to high fuel costs, a strong Australian dollar, increasing international competition and a domestic price war with rival Virgin Australia Holdings.

The airline is just one year into a three-and-a-half year turnaround strategy, which includes stripping costs, freezing capacity and slashing 5,000 jobs.