Australian carrier Qantas on Thursday posted its first annual loss since privatisation in 1995 and cancelled orders for 35 Boeing jets as high fuel costs and industrial action hammered its bottom line.
The airline announced a net loss of Aus$244 million (US$256 million), a half-billion-dollar reverse from a net profit of Aus$250 million in the previous 12 months.
Its underlying profit before tax in the year to June 30 -- the airline's preferred measure of financial performance -- was Aus$95 million, down from Aus$552 million.
Revenue was Aus$15.7 billion and on the plus side the national flag carrier said it had a Aus$3.4 billion cash balance.
The dismal result was expected after warnings from Qantas that its international arm was struggling due to a deterioration in global operating conditions driven by the European economic crisis and high jet fuel bills.
A soaring Australian dollar and a bitter battle with unions over wages and conditions that saw chief executive Alan Joyce ground the entire fleet for 48 hours in October also cost the airline dearly.
Despite this, Qantas's share price was 4.2 percent higher at Aus$1.22 in early afternoon trade, with investors pleased with the decision to cancel an order for 35 Boeing 787-9 Dreamliner aircraft.
"Qantas has been through an exceptional period in its history over the past 12 months," said Joyce, who will forgo any bonus or pay rise.
"Over the course of the year we made significant progress in advancing the group's strategy -- building on our strong domestic business and frequent flyer programme and growing Jetstar across Asia.
"Qantas' international's turnaround plan is on track and set for improvement in 2012/13."
The airline confirmed a Aus$450m loss at its international arm and said the result was also negatively impacted by record high fuel costs of Aus$4.3 billion, up Aus$645 million on the previous year.
The industrial dispute that brought the airline to a standstill cost Aus$194 million.
The airline, which is fighting to hold on to its coveted investment-grade credit rating, did not offer any forward-looking profit guidance.
But it said the operating environment and economic outlook "remains challenging, volatile and dependent on a number of uncontrollable external factors".
"We will continue to invest capital efficiently as we target greater competitiveness and customer satisfaction to deliver a stronger Qantas group," added Joyce.
To cut costs, Qantas cancelled orders for 35 Boeing 787 Dreamliners, a more fuel-efficient jet, in a decision that represents an US$8.5 billion reduction in capital expenditure at list prices.
While those plane orders were put off, delivery of 15 787s to its budget offshoot Jetstar will continue as planned, with the first aircraft to arrive in the second half of 2012.
This will enable the transfer of Airbus A330 aircraft from Jetstar to Qantas' domestic service, and the eventual retirement of Qantas' Boeing 767 fleet.
"The B787 is an excellent aircraft and remains an important part of our future," said Joyce.
"However, circumstances have changed significantly since our order several years ago. It is vital that we allocate capital carefully across all parts of the group.
"Qantas has always maintained flexibility in its fleet plan and made changes when required."
In a bid to halt the dramatic slide in profits, Joyce earlier this year announced Qantas would split its international arm from its domestic operations.
Each of the two entities will run as separate businesses with their own chief executives and reporting of financial results.