Qantas's international operations significantly narrowed its loss for the first half of the financial year as costs improved and the carrier exited loss-making routes.
Qantas International recorded underlying earnings before interest and tax (EBIT) of Australian dollars (A$) $91 million ($93.3 million) for the six months ended 31 December 2012, a A$171 million improvement from the A$262 million EBIT loss a year ago.
The Oneworld carrier says that unit costs improved by 4% over the period, while international capacity fell by 7% as it ended some services.
"By closing down loss-making routes, retiring aircraft and consolidating maintenance tasks, we have taken significant costs permanently out of the business," says Qantas chief executive Alan Joyce.
In addition, the airline says that yield was maintained over the six months despite the competitive environment.
Joyce says that the international business is now "well advanced in its turnaround plan", a key cornerstone of which is its proposed alliance with Emirates, which is awaiting final authorisation by Australian competition authorities before it commences on 1 April.
This will see Qantas move its hub for European services from Singapore to Dubai, which is expected to result in A$40-50 million in transformation costs during the second half of the financial year.
The two airlines have already begun selling joint fares and itineraries. Joyce says that in the second week of booking, there were five times more bookings received than during the equivalent week a year before.
"We sold four times the number of seats to Barcelona than the same week last year; 13 times more to Munich, 14 times to Copenhagen and 17 times to Milan," he adds.
On its Asian services, Joyce has announced that it will refurbish its Airbus A330 fleet to feature new lie-flat beds in business class that will support the rescheduled services to Singapore and Hong Kong. It will also add Kuala Lumpur to its network through a codeshare with Emirates.
"Taken together, these measures provide a platform to return Qantas International to profit and, over the long term, target growth opportunities," says Joyce.