Despite what the carrier branded as the “most challenging period in its long history,” Australian flag-carrier Qantas has reported an underlying profit of AUS$124 million (£68 million) for the year to June 30th.

The figure is, however, down 91 per cent on last year.

This drop reflects a strong first half of the year (AUS$771 million underlying profit before tax) followed by a near total collapse in travel demand and a AUS$4 billion drop in revenue in the second half due to the Covid-19 crisis and associated border restrictions.

Fast action to radically cut costs and place much of the flying business into a form of hibernation helped minimise the financial impact from this extraordinary sequence of events.

From April to end of June, group revenue fell 82 per cent while cash costs were reduced by 75 per cent, helping to limit the drop in underlying profit before tax in the second half of the year to AUS$1.2 billion.

At the statutory level, the group reported a AUS$2.7 billion loss before tax - due mostly to a AUS$1.4 billion non-cash write down of assets including the A380 fleet and AUS$642 million in one-off redundancy and other costs as part of restructuring the business for recovery.

Qantas Group chief executive, Alan Joyce, said: “The impact of Covid-19 on all airlines is clear.

“It is devastating, and it will be a question of survival for many.

“What makes Qantas different is that we entered this crisis with a strong balance sheet, and we moved fast to put ourselves in a good position to wait for the recovery.”

He added: “We have had to make some very tough decisions in the past few months to guarantee our future.

“At least 6,000 of our people will leave the business through no fault of their own, and thousands more will be stood down for a long time.

“Recovery will take time and it will be choppy.

“We have already had setbacks with borders opening and then closing again.”

Despite significant uncertainty across most markets, the group said it remains well positioned to take advantage of the eventual return of domestic and, ultimately, international travel demand.

In the meantime, Qantas Freight and Qantas Loyalty continue to generate significant cashflow and charter operations for the resources sector are performing strongly.

Joyce said the full year result showed how the Covid-19 crisis had derailed what would have been a strong financial performance.

“We were on track for another profit above AUS$1 billion when this crisis struck.

“The fact that we still delivered a full year underlying profit shows how quickly we adjusted when revenue collapsed.”