The Qantas Group reported this week that the airline achieved a pre-tax profit of A$181m ($150m) for the year ended June 30 2009, reflecting a profit of A$288m ($239m) in the first half of the

year, offset by a loss of A$107m ($89m) in the second half.

The airline says that the decline – from A$1.408m ($1.1bn) in the previous year was a reflection of the challenging operating environment over the year and management added that while the business started to feel the effects of the economic downturn in the first half, the impact was greater in the second half, with rapid falls in demand causing passenger and freight revenue to decline by A$1.3bn ($1bn).

In response to the downturn in passenger demand, the airline said it initiated a number of capacity cuts throughout 2009, beyond those commenced in 2008, and developed plans to ground older aircraft, while continuing with cash preservation measures, targeted leave initiatives and further redundancies.

To maintain liquidity and balance sheet strength, it also raised over A$500m ($415m) of new equity, arranged A$1.1bn ($913m) of funding facilities for future aircraft purchases, and successfully negotiated the deferral of US$7.9bn of capital expenditure with Airbus and Boeing.

Qantas suffered rapid revenue declines, particularly in the international and premium markets. Despite the immediate implementation of cost reduction initiatives, the natural lag of their financial realisation impacted Qantas' profitability. By contrast, Jetstar was able to profitably grow capacity during the year, as the leisure market proved more resilient in the economic downturn.

Passenger revenue was significantly affected by the economic downturn by A$1,105m ($917m), or 8.7%. A change to the mix of travel classes, as well as discounting of fares to maintain loads in a shrinking market, resulted in the group yield falling from 11.81 cents to 11.30 cents. Group seat factor (load) declined 1.1 points, to 79.6%, further reducing revenue.

Reduced capacity and economic factors also affected freight revenue, which declined from A$959m to A$764m (From $797m to $635m). Strong competition, particularly in Asia, resulted in yield reducing significantly from the prior year, while capacity cuts also contributed to the decline.

During the year, capacity was cut by 5% mainly on international routes. Competitor pressure and the economic downturn caused yields to reduce by 4.1%, excluding foreign exchange movements. However, pricing strategies assisted in maintaining load factors at 80.1%. Passenger revenue decreased by A$1.3bn ($1bn), or by 11.7%, particularly across international premium cabins.

But Qantas Ceo Alan Joyce remained upbeat, pointing to the diversity of the Qantas Group's operations which had allowed it to remain 'one of the few airline operators worldwide to produce a full-year profit, despite the impact of the global economic downturn'.

He said: ‘There has never been a more volatile and challenging time for the world's aviation industry. When most airlines are reporting losses, the Qantas Group is reporting a profit for the full-year. Through unprecedented and significant shifts in operating conditions and demand, we have remained financially strong.

‘This has been due to our strategy built around two strong flying brands in Qantas and Jetstar, a portfolio of airline-related businesses, and an ongoing focus on managing costs and driving efficiencies.’