Qantas Airways has posted a record 2.8 billion Australian dollar (£1.5bn) loss, reflecting a profit-draining battle with its smaller rival Virgin Australia and aircraft write-downs.
The loss for the financial year which ended on June 30 is the largest the former state-owned airline has posted in its 94-year history. It made an one million-dollar (£563,000) profit in the previous year.
The dire result was expected. Shares of Qantas were up 7% in Sydney on the airline's confirmation it would separate its domestic and troubled international businesses.
It will establish a company for the international business that will be able to attract new investors after an Australian law change eased limits on foreign investment in Qantas
The result included an 2.6 billion-dollar (£1.4bn) write-down of the value of its ageing international fleet of Boeing 747s and Airbus A380s, reflecting a weakened Australian dollar.
Excluding the write-down and other one-off costs, Qantas made an underlying pre-tax loss of 646 million dollars (£364m), compared with a 186 million-dollar (£105m) underlying profit a year earlier.
Qantas chief executive Alan Joyce described the result as "confronting", but said the massive loss represented history.
"We have now come through the worst," he said. "With our accelerated Qantas transformation programme, we are already emerging as a leaner, more focused and more sustainable Qantas group."
Mr Joyce said the underlying loss for the latest year reflected higher fuel costs and growth in passenger capacity outstripping demand.
He forecast a profit in the first half of the current fiscal year.
The airline announced in February it would shed 5,000 employees. So far it has axed 2,500 staff.