Qantas chief executive Alan Joyce welcomed the improved results but stressed the performance on international routes, which lost about $200 million, was unacceptable.
He also warned of future volatility as the group planned new aircraft purchases and other spending exceeding $5 billion on the next few years and plans for further expansion in Asia.
Mr Joyce also equated Qantas to a manufacturing firm exposed to the international problems caused by the high Australian dollar.
The result comes as Qantas shares hit a record low $1.42 this month, prompting speculation that the airline group will be the target of a takeover bid by private equity groups.
Mr Joyce played down the reports, stating that while he was aware of speculation there had been no formal or informal approach to the airline's management.
"I'm aware of the speculation and unless there's something more firm and definitive I'm not going to set the horses running,'' he said.
The $552 million underlying profit before tax, up by 46 per cent, comes despite losses of $200 million on its international operations, which the airline does not break out as a separate item in its accounts.
“Given the aviation sector’s inherent volatility, the flexibility to generate revenue from different parts of the business and different market sectors is a major strength for the group,” Mr Joyce said.
But Qantas refused to give profit guidance for the coming year due to that volatility and has not declared a final dividend for this year.
Its share price hit $1.60 this morning before falling back to $1.54, up a third of a per cent today.
Qantas also expects to increase capacity in the first half by eight per cent.
As at August 22, underlying fuel costs for the first half are estimated to increase by about $500 million to $2.2 billion.
The strength of the group came through in all other areas, with Qantas domestic offsetting international losses by pre-tax earnings of earnings $228 million compared to $67 last year - up 240 per cent - and Jetstar earnings of $169 million, up 29 per cent.
Qantas freight enterprises also increased its result to $62 million, up 48 per cent.
But the most profitable sector of Qantas came on the ground, with its Frequent Flyer business of eight million members pulling in a record $342 million of underlying pre-tax earnings.
The airline achieved its result despite a $224 million impact from natural disasters, including cyclones Carlos and Yasi in Queensland, the Christchurch and Japanese earthquakes and the Chilean volcanic ash cloud.
The airline said the $95 million settlement with Rolls Royce over problems with the Trent 900 engines on its A380s – resulting from the near-disaster in Singapore last November and the grounding of the fleet – had closed the matter.
Mr Joyce said Qantas was determined to push on with its program for expansion, despite opponents who harked back to the days of protective airline regulation.
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