"It's unequivocally a stunner. They are going from strength to strength," said Nomura Australia analyst Eric Betts.

Qantas, which is 25 per cent owned by British Airways Plc, had notched up a net profit of A$304.8 million in the 1997/98 year.

Sales for 1998/99 (July-June) rose to A$8.45 billion, compared to A$8.13 billion on the year. The accounts also included an abnormal gain after tax of A$38.9 million, related to profit on the sales of investments.

Operating profit after tax but before abnormal items was up 25.2 per cent at A$382 million in 1998/99. According to profit compiler Barra's Global Estimates, analysts' pre-abnormal net profit forecasts were between A$279 million and A$397 million.

A final dividend of 11 cents was awarded to shareholders, alongside a specialdividend of 13.5 cents per share, both fully franked, which the airline said was aimed at maximising shareholder returns.

While net passenger revenue had increased 4 per cent and overall passenger yields were up 1.8 per cent in 1998/99, overall yields were down 0.9 per cent.

The airline had faced a highly competitive operating environment over the past year, but was looking to continue with the same strategies which had pulled it through that period, Qantas chairman Gary Pemberton said.

Revenue trends were strong the start of 1999/00, Pemberton said, but added further efficiency gains would have to be made to offset the effects of its ongoing A$700-million investment programme.

While returns on Asian routes generally continued to be unsatisfactory, improvements had been seen on some segments, chief executive James Strong said.

However, a regional recovery would not be "overnight," he said, adding that he saw no general resumption of the Asian services Qantas had slashed as a result of the regionalcrisis.

Strong said the airline was still interested in buying a 23 per cent stake in Thai Airways International Plc but no date had been set by the Thai government to offload a planned 23 per cent of the carrier.

Although passenger numbers were expected to soar in the lead-up to the Sydney 2000 Olympic Games and force the airline to increase its capacity, Strong said it was still too early to quantify how Olympic sales were stacking up or the effect it would have on the bottomline.

"Obviously (the Olympics) should create very positive conditions in terms of volumes of traffic," he said.

The exposure and publicity related to games would also result in a longer-term growth period, he added.

Qantas, alongside British Airways, is a member of the Oneworld global marketing alliance which includes Canadian Airlines, Cathay Pacific, Iberia, and Finnair. Ireland's state-owned Aer Lingus was recently cleared to join Oneworld. Qantas shares closed five cents lower at A$5.15.