Net income totaled A$54 million ($48 million) in the six months ended June compared with a loss of A$93 million a year earlier. Second-half figures were calculated by subtracting first-half earnings from the A$112 million full-year profit the Sydney-based carrier reported today.

Qantas, Singapore Airlines Ltd. and Cathay Pacific Airways Ltd. flew more business and first-class passengers on international routes in the period as travel demand recovered from the global recession. The Australian carrier’s 90 percent share of its home business-travel market is cushioning the impact of rising capacity on domestic routes that has pushed discount leisure fares to record lows.

“The earnings recovery should be driven by yield growth,” Shavarsh Bedrossian, an analyst at Citigroup Inc., said in a report last week, as he affirmed his “buy” rating on Qantas. “‘We maintain our view that the competitive pressures have not permanently changed the landscape.”

Qantas’s annual net income missed the A$181 million average of eight analyst estimates compiled by Bloomberg. Full-year sales fell 5.4 percent to A$13.8 billion.

Full-year pretax profit totaled A$377 million, compared with the airline’s May forecast for earnings of A$300 million to A$400 million.

First-half profit in the current year “may be materially stronger” than the year earlier subject to fuel prices and trading conditions continuing, Qantas said without providing a specific forecast.

Qantas fell 3.1 percent yesterday to A$2.51 in Sydney trading. The carrier has dropped 16 percent this year, the second-worst performance among the 31 stocks in the Bloomberg World Airlines Index. Australia’s benchmark S&P/ASX 200 index has declined 8.5 percent.

Jetstar Earnings

Full-half underlying earnings before interest and tax at the Qantas-branded carrier, the company’s biggest unit, rose to A$67 million compared with A$4 million a year earlier. Jetstar, Qantas’s budget airline, increased profit 22 percent to A$131 million after adding new routes.

Chief Executive Officer Alan Joyce, 44, is one-third of the way through a three-year plan to cut A$1.5 billion in costs by flying more direct routes, using more fuel-efficient aircraft and paring the time planes spend taxiing to runways.

The program saved A$533 million in the first year.

“The group’s two complementary airlines, Qantas and Jetstar, provided flexibility to adapt to the changing market conditions,” Joyce said in the statement. “International demand and yield across the business and leisure sectors continue to improve and domestic business demand is also strengthening.”

Qantas and Jetstar have about 65 percent of Australia’s domestic air-travel market, compared with about 30 percent for second-ranked Virgin Blue Holdings Ltd. Brisbane-based Virgin Blue in May cut its full-year forecast for profit before tax and items to between A$20 million and A$40 million from A$80 million.

Earnings at Qantas’s frequent flyer program rose 45 percent to A$328 million in the past year as memberships increased.

Source: Bloomberg