Qantas overcame higher fuel costs, a competitive domestic market and international capacity growth to achieve record half year profits.

The Australian flag carrier reported underlying pre-tax profits of A$976 million (£547 million), a rise of almost 15% year-on-year in the six months to December 31.

However, earnings from international operations fell by 6% to A$222 million.

International operations by subsidiary Jetstar generated “strong earnings” helped by lower operating costs of new Boeing 787-8 Dreamliners but offset by a A$10 million it from Bali ash cloud disruption.

Chief executive Alan Joyce said: “Qantas International faced the challenges of rising fuel price and more seats in the market. But it largely held its own, with a 6% cent decline in profit and a slight rise in unit revenue.

“This is an important transition year for Qantas International and it’s setting up a bright future.

“The airline is welcoming the Dreamliner and making key changes to its network – including hubbing through Singapore and Perth; taking over some routes from Emirates on the Tasman; and starting the unique Perth-London service.

“These changes will generate material benefits from full hear 2019 onwards, and the early signs are very positive.”

He added: “Looking ahead, we’re broadly positive about trading conditions and the prospects for consumer demand.

“After several years of turning this business around, Qantas now has a lot of momentum behind it.

“Consistent financial performance gives us the headroom to plan for the future.”