Qantas has reported a loss of A$256 million (£161 million) for the year to June, leading it to cancel an order for 35 Boeing 787s.
It is the first deficit Qantas has reported in 17 years, since privatisation. The Australian carrier reported a A$250 million profit a year ago.
Qantas blamed high fuel costs and economic uncertainty, leading to growing losses on its international network.
However, the carrier also suffered substantial losses – close to A$200 – from a strike last year which led Qantas to ground its entire fleet. The dispute was only ended by government intervention.
Chief executive Alan Joyce said: “We confront very difficult and uncertain trading conditions in Britain, Europe and the US.”
Qantas reported a loss of A$450 million on its international operations where it is has suffered a fall in market share.
Joyce said: “Our biggest challenge is Qantas International.” The carrier has already announced the loss of 2,800 full-time jobs.
Joyce said: “Qantas’s international turnaround plan is on track and set for improvement in 2012-13.”