Australian flag carrier Qantas is slowly beginning to turnaround financially as the air carrier logged $6 million full-year net profits, its first after it suffered from its first loss since the company was privatised.

The profit was made possible by reducing debt and costs, selling non-core asset and flagging a cut in capital spending. With the improvement in Qantas's finances, shares in the air carrier went up 14 per cent after the firm's underlying pre-tax profit doubled to $192 million.

However, the international operations of Qantas reduced their losses to $246 million, while its domestic unit and Jetstar logged weaker earnings. The cut in losses was achieved by thousands of layoffs, expansion into Asian markets and removing the less profitable routes like those between Australia and Germany.

But the bulk of Qantas's earnings came from the $125 million compensation from Boeing for late aircraft deliveries and $134 million from the change Qantas books its revenue from unused airline tickets.

With this positive development, Qantas Chief Executive Alan Joyce said that capacity was moderating in the domestic market which contributed the bulk of the airlines' earnings.

On the international market, while its alliance with Emirates helped cut Qantas's losses on European routes, Mr Joyce admitted that its major problem is its Asian operations, which is a signal for the company to try different approaches for each Asian market.

"This progress has come in a tough competitive environment with high fuel costs and rapid capacity growth from competitors," Mr Joyce said in a statement.

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