Qantas expects trading conditions will remain challenging in 2014 – despite a reduced level of capacity growth in the Australian domestic market.
Chief executive Alan Joyce said while the Australian dollar had recorded its second largest quarterly fall since the float, "over the long term, we view the lower dollar as a positive".
"It encourages inbound tourism. And it reduces the cost deficit between Qantas and our competitors," Joyce said.
In the short term, however, Joyce said a lower dollar was a challenge, resulting in higher fuel costs – "when jet fuel is already a major headwind".
"At current market rates we expect underlying fuel costs to be $160 million higher in the first half than in the prior period."
He said the global outlook was mixed. "The US economy is improving and there are signs of recovery in Europe as well.
"At the same time, there is uncertainty over how fast and how sustainable the recovery will be.
"In this volatile market, we are focused on the elements we can control."
