Qantas shares have soared to their highest level in almost four years as the airline forecast a $550 million earnings turnaround less than 12 months into a major restructure.
Qantas expects to make an underlying pre-tax profit of between $300 million and $350 million in the first six months of 2014/15, up from a $252 million loss a year earlier.
Cost savings from the $2 billion, three-year transformation program, plus lower fuel costs, are the main factors behind the improved performance, chief executive Alan Joyce said.
"This demonstrates that the strategy we have outlined to transform our business is working," he said on Monday.
The three-year transformation program includes 5,000 job cuts - half of which had gone by mid-2014, just six months in.
Qantas shares gained 29 cents, or 13.8 per cent, to $2.39, their highest price since February 2011.
The shares have gained 86 per cent in the past two months, adding $2.4 billion to the airline's market value, to $5.25 billion.
Mr Joyce said all parts of the airline were expected to be profitable at an underlying earnings level in the half year to December 31.
No guidance was given for the second half, but Mr Joyce said at least $300 million in further benefits from the transformation program were expected to be realised before the end of the June.
Significantly lower fuel prices, due to plunging oil prices, would also be a major boost.
Qantas expects to reap a $30 million benefit from lower oil prices in the first half.
"If they stay at the current levels there could a substantial benefit of fuel price in the second half, that will benefit the international business in particular, but all of our businesses," Mr Joyce said.
Morningstar analyst Daniel Mueller said Qantas was enjoying strong momentum as an end to its war with Virgin Australia in the domestic market coincided with lower fuel costs and major spending cuts.
"I think the market tends to follow the momentum; when things are going well the share price goes up," he said.
"But Qantas over the long term can be very volatile, so I think it is important to look through that and take a more normalised view of the business."
Qantas will announce its first half results on February 26.
