Qantas has suffered a massive $A2.8 billion loss, the biggest in the airline's history and far worse than had been predicted.
The Australian airline posted a net loss of $A2.84 billion for the year to 30 June compared to a $A1 million profit a year ago.
The result included a $A2.6 billion writedown to the value of its ageing international fleet, AAP reports. Excluding the writedown and other one-off costs, Qantas made an underlying pre-tax loss of $A646 million, compared to a $A186 million profit a year ago.
Chief executive Alan Joyce described the result as "confronting", but said the massive loss represented the year that is past.
"We have now come through the worst," he said in a statement on Thursday. "With our accelerated Qantas transformation program we are already emerging as a leaner, more focused and more sustainable Qantas group."
Meanwhile, the airline has ruled out selling or floating its profitable frequent flyer business, Qantas Loyalty, in order to fund its turnaround.
Qantas has also decided to separate its domestic and international arms, creating a new corporate entity for the Qantas International.
Mr Joyce said the Qantas Sale Act, recently passed by the federal parliament, had paved the way for the structural separation.
"This will have no impact on the day-to-day operations, network or staffing at Qantas International," he said.
The carrier has also announced it will write down its entire fleet of Boeing 747s and A380s, at a value of $A2.6 billion.
The airline's international division remained the biggest drag on the company, suffering an underlying loss of $A497 million for the year, more than double the $A246 million loss it posted a year ago.
Qantas attributed the result to increased competition from other carriers and record fuel costs.
Its discount carrier, Jetstar, made a $A116 million loss after losses from its Asian operations offset profits from its Australian division.
Qantas domestic saw its underlying earnings slump from $A365 million to $A30 million as a result of a bruising capacity war with rival Virgin. The airline has been increasing capacity in an effort to maintain its 65 per cent market share against a challenge from Virgin.
Critics were quick to lambast Qantas for the result, including former prime minister Malcolm Fraser, who took to Twitter to criticise Mr Joyce soon after the results were released.
"Qantas chief Alan Joyce has many questions to answer. Board made foolish decisions, being eaten by Emirates," he said in a tweet.
Qantas Loyalty was easily the most profitable part of the business, lifting underlying earnings from $A260 million to $A286 million during the year. The airline's frequent flyer program had 10.1 million members by 30 June.
Qantas ruled out any new Jetstar ventures in Asia while it tries to get itself back to profitability, but Mr Joyce was confident of the future of its operations in Singapore and Japan.
In some positive news, Qantas will not be making job cuts beyond the 5000 already announced as part of its $A2 billion three-year restructuring plan.