Qantas expects traffic to recover by December

The airline recorded a better-than-expected full-year net profit of 344m Australian dollars (�142m; $225m), but revealed it lost A$9m in the six months to June.

This was the first time that Qantas has fallen into the red since its privatisation in 1995.

Qantas has already promised a A$1bn cost-cutting drive, and says it is on course for recovery within the next financial year.

'Severe strain'

The Sars virus has led to a collapse in Asian travel, but Qantas said that passenger numbers should recover by December.

Nonetheless, the airline said that trading conditions were "the most difficult in history".

"After a record first half we saw all sections of our business come under severe strain in the second half, with inbound visitors to Australia falling by more than 20% in some months and by up to 45% percent on some Asian routes," chief executive Geoff Dixon said.

By bundling up accumulated leave, Qantas has managed to reduce staffing levels by the equivalent of 2,500 full-time employees between April and June this year.