Lower fares and stronger competition have taken their toll on profits at Qantas for the six months to December.
More empty seats on flights contributed to a 7.5% fall in underlying pre-tax profit to A$852m ($656m; £527m), while revenue slipped 3.3% to A$8.18bn.
The results were better than guidance given by the airline.
Shares rose more than 5% in morning trading in Sydney to A$3.73, although the stock is flat over the past 12 months.
Chief executive Alan Joyce said: “The international market is tough because of capacity growth and lower fares, and Qantas International is not immune from those pressures.”
Wi-fi in the sky
The airline planned to remain disciplined on capacity, keep costs down and introduce new aircraft and offerings such as high-speed Wi-Fi.
Qantas will start flying the Boeing 787-9 Dreamliner this year.
Qantas also said it expects to start offering free onboard Wi-Fi on domestic routes in the coming weeks, followed by international services later in the year.
The company did not give annual profit guidance as the short-term outlook remains subject to variable factors, including “oil price movements, foreign exchange movements and global market conditions”.
In the year to June 30, Qantas posted a record net profit of A$1.42bn and announced its first dividend payout to shareholders in seven years.
That followed cuts of A$2bn to costs and restructuring, with thousands of jobs axed and dozens of aircraft sold or orders deferred.