Qantas Airways says it will cancel orders for Boeing 787 aircraft to cut costs, as it posts a $245 million full year net loss.
The loss for the 12 months to June 30, 2012, compares with a net profit of $250 million in the previous year.
Qantas says it will cancel its firm order for 35 Boeing 787-9 aircraft, representing an $US8.5 billion ($A8.12 billion) reduction in capital expenditure at list prices.
Airlines typically receive discounts for bulk aircraft orders, so the actual reduction is likely to be less than $US8.5 billion.
Qantas said underlying profit before tax - the airline's preferred measure of financial performance - for the full 2011/12 year was $95 million, down sharply from $552 million the previous year.
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The result was at the upper end the airline's expectations of between $50 million and $100 million.
Qantas chief executive Alan Joyce said the aircraft cancellation was due to "lower growth requirements in this uncertain global context".
"With lower capital requirements and substantial liquidity, we are now turning our attention toward debt reduction to strengthen the balance sheet," Mr Joyce said in a statement.
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Fuel costs rose 18 per cent to a record $4.329 billion, Qantas said.
Mr Joyce said Qantas's international operations, which were being restructured, lost about $450 million and was the only part of the airline group not to be profitable in 2011/12.
Qantas did not offer guidance, saying the operating environment and economic outlook for the first half of 2012/13 "remains challenging, volatile and dependent on a number of uncontrollable external factors".
"With this volatility in global conditions, fuel and foreign exchange rates, as well as the ongoing internal transformation we have underway, it would be imprudent to offer profit guidance at this time," Mr Joyce said.