Qantas's Dreamliner cancellations will reduce capital spending by $US8.5 billion ($8.1 billion), based on list prices for the planes, although the actual amount will be less once discounts are taken into account. Big loss ... Alan Joyce , CEO of Qantas and Gareth Evans CFO deliver the results. Credit:Nick Moir The airline will receive about $430 million in liquidated damages from Boeing as part of its ability to exercising its rights due to long delays to the Dreamliner program. It means Qantas’s bottom-line will be bolstered in the first half of the new financial year by $US140million. The company's shares rose 3 cents, or 2.6 per cent, to $1.20.

Underlying result Qantas posts first loss since it was fully privatised. Credit:Dean Sewell The airline posted revenue of $15.7 billion for the year to June 30. The airline said it generated an underlying pre-tax profit of $95 million, a fraction of the $552 million a year earlier. The net loss itself is not a huge surprise because the airline group, which includes Jetstar, had warned in June that it would slide into the red due to high fuel prices, big losses from its premium international business and a battle with Virgin Australia in the domestic market. Qantas generated a second-half underlying loss before tax of $107 million compared with a $135 million profit a year earlier, according to Reuters calculations.

However, that outcome beat expectations of a $128.4 million loss expected by analysts in a Reuters survey. Qantas is separating its loss-making international business from its profitable domestic unit, eliminating loss-making routes, axing 2,800 jobs and slashing capital spending over two years by $700 million. 'Uncertain global context' Qantas chief executive Alan Joyce said the aircraft cancellation was due to ‘‘lower growth requirements in this uncertain global context’’. ‘‘With lower capital requirements and substantial liquidity, we are now turning our attention toward debt reduction to strengthen the balance sheet,’’ Mr Joyce said in a statement.

Fuel costs rose 18 per cent to a record $4.33 billion, Qantas said.



Mr Joyce said Qantas’s international operations, which were being restructured, lost about $450 million and was the only part of the airline group not to be profitable in 2011/12. Qantas did not offer guidance, saying the operating environment and economic outlook for the first half of 2012/13 ‘‘remains challenging, volatile and dependent on a number of uncontrollable external factors’’. ‘‘With this volatility in global conditions, fuel and foreign exchange rates, as well as the ongoing internal transformation we have underway, it would be imprudent to offer profit guidance at this time,’’ Mr Joyce said. Laggard Qantas shares have been battered over the past year, sinking to a record low of 96 cents in June. They closed yesterday at $1.17, still 20 per cent lower in 2012, compared with a 61 per cent rally for smaller rival Virgin Australia and the 7.8 per cent rise for the broader ASX200 share index.

Compared with international peers, Qantas has also been a laggard, trailing the 2.1 per cent loss for Hong Kong-based Cathay Pacific and a 6.9 per cent gain so far this year for Singapore Airlines. The full-year loss includes costs from the bitter industrial dispute last year between Qantas and three union representing engineers, pilots and baggage handlers. Loading The airline is caught in a pincer movement between capacity increases on international routes by Middle Eastern and Chinese airlines, and a battle with Virgin in its lucrative domestic market. Over the past decade, Qantas has made the lion's share of its earnings from the domestic market. with Reuters, AAP