Qantas has been forced to cancel an order for new Boeing airliners after reporting its first annual loss since the company's privatisation in 1995.

The airline posted a net loss of $245 million for the 2012 financial year, in a half-a-billion dollar turnaround on last year's profit.

It said the fall in profits was largely due to higher fuel, restructuring and industrial action costs.

A survey by financial news service Bloomberg shows analyst forecasts centred on a $223.5 million net loss, meaning the airline's result has disappointed already lowered expectations.

However, investors were pleased by the decision to cancel orders for 35 new Boeing 787s, which will save Qantas approximately $US8.5 billion ($8.1 billion).

The future savings helped propel Qantas shares more than 5 per cent higher to $1.23 by 11:29am (AEST).

The 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.

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"Qantas has been through an exceptional period in its history over the past 12 months," chief executive Alan Joyce said this morning.

"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 program and growing Jetstar across Asia.

"Qantas international's turnaround plan is on track and set for improvement in 2012/13."

Qantas says the result was negatively affected by record high fuel costs of $4.3 billion (up $645 million on the previous year), and industrial action which culminated in the airline grounding its fleet, costing a total of $194 million.

There were further one-off costs of $398 million associated with restructuring the airline's international network.

The company says its profit before tax excluding major one-off costs was $95 million.

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The decline in profitability comes despite a 5.6 per cent increase in revenue to $15.7 billion.

Among the airline's divisions, Qantas swung from a $228 million underlying profit to a $21 million loss, while the 'corporate/unallocated' category accounted for a loss of $191 million.

Qantas says its Jetstar division increased underlying profit by 20 per cent to $203 million.

While still posting a $231 million profit, there was a worrying 32 per cent fall in earnings for the airline's frequent flyer division.

Qantas freight also saw earnings slip 27 per cent to $45 million.

Shareholders will not receive a dividend from Qantas for the 2012 financial year.

ABC/AFP