Qantas expects to report its second-highest annual profit this year, on the back of an improving domestic market and a “slight moderation” in challenging international conditions.

The Australian airline forecast a full-year pre-tax profit of about A$1.35 billion for the year to June 30.

This came the decline in revenue in the last quarter was limited to 1.4% to A$3.96 billion, despite a “tough” international market.

Chief executive, Alan Joyce, said: “Between our domestic flying businesses, Qantas and Jetstar, and Loyalty [frequent flyer scheme], we are delivering solid earnings growth.

“Internationally it’s still tough, with high levels of capacity growth pushing fares down, but we’ve seen those conditions
ease slightly.

“Because of the work we’ve done to transform Qantas and expand into growth markets, our international businesses are navigating the headwinds better than our key competitors.

“Over the past three months, we’ve launched free wi-fi on our domestic network, opened new customer lounges in Brisbane and put the world-first Perth to London service on sale.

“These are all things that improve our position in a competitive market and encourage more people to choose Qantas.”

Giving a third quarter trading update, said: “Last year we posted the highest earnings in Qantas’ history and our guidance today would make this year’s underlying profit the second best in almost 100 years. It shows we’re able to keep performing in a mixed global environment.

“Between our domestic flying businesses, Qantas and Jetstar, and Loyalty we are delivering solid earnings growth.”