UPDATE 1.20pm: Qantas shares have gained more than 4 per cent on moves by the airline to strengthen its balance sheet and improve shareholder returns.
Qantas has also forecast an underlying pre-tax profit in the range of $180 million to $230 million for the six months to December 31, which compares to an underlying pre-tax profit of $202 million in the previous corresponding period.
The airline has launched a $100 million buy-back of about 4 per cent of its issued shares, a move aimed at strengthening its dwindling share price.
Investors responded positively, sending Qantas shares up five cents, or 4.07 per cent, to $1.28 at the close of trade.
"The board believes the current Qantas share price does not reflect fair value of the group, particularly considering the underlying strength of its domestic, loyalty and Jetstar businesses and the proposed partnership with Emirates,” chairman Leigh Clifford said in a statement.
Share buy-backs reduce the number of shares on issue, typically increasing the trading price of the remaining shares on issue.
Qantas shares have traded as high as $1.815 in the past 12 months, and hit a low of 97 cents in June.
The airline also plans to repay $650 million of debt in January, well ahead of its due date in June, 2013.
“The share buy-back and accelerated debt reduction reflect the board's goal of returning value to shareholders and maintaining a strong balance sheet, as well as retaining the flexibility to pursue current growth initiatives,” Mr Clifford said.
The airline said it expects its capacity in the six months to December to be up by between one and three per cent from the same period in the previous year, but average revenue per passenger would be down.
Fuel costs for the first half of the 2012/13 financial year, excluding the impact of carbon pricing, are expected to be about $2.2 billion, the same as in the previous first half.
"The outlook for the second half of FY13 remains volatile and, given the uncertainty in global economic conditions, fuel prices and foreign exchange rates, it is not possible to provide further guidance at this time,” Qantas said.