SYDNEY - AUSTRALIA'S national airline Qantas on Thursday reported a 44 per cent increase in annual net profit to a record A$969 million dollars (S$1.2 billion) despite high fuel prices and a series of woes.

Revenue for the year ended June 30 rose 7.5 per cent to A$16.19 billion dollars after Qantas carried 38.6 million passengers, up 6.0 per cent, the company said.

Despite high fuel costs, the airline recorded a 46 per cent increase in profit before tax to A$1.41 billion dollars, ahead of its forecast of at least 40 per cent growth.

Qantas declared a final dividend of 17 cents per share, taking the full-year payment to 35 cents, up from 30 cents last year.

The profit result comes shortly after the airline announced in July that it would slash 1,500 jobs worldwide as it tried to combat rising oil prices and challenging market conditions.

The carrier also cancelled plans to hire 1,200 new staff and increase its capacity by eight percent in 2008-2009, and announced it will retire up to 22 older aircraft from its fleet.

Chairman Leigh Clifford said that after an excellent performance across all segments for the first three quarters, the business was starting to see the effects of a slowing economy and rising fuel prices.

'We have benefited from a strong revenue environment, which was supported by major investments in customer service and product. The result was further underpinned by sustained efforts to improve efficiency', he said.

Chief executive Geoff Dixon acknowledged in a statement that the airline had 'confronted a number of challenges in recent months'.

These included a mid-air blast, believed to be caused by an exploding oxygen bottle, which blew a hole into the fuselage of a plane last month and forced an emergency landing in Manila.

Coupled with the impact of an industrial dispute with aircraft engineers, the incident 'caused significant disruption for our passengers and impacted Qantas's financial and operating performance in recent months', he said.

Qantas flights suffered a series of embarrassing incidents in the wake of the forced landing in Manila, from a small body panel falling off a jet en route to Singapore and an engine losing power on the way to New Zealand.

Qantas also pulled six planes from service after it found that a maintenance procedure, reportedly designed to stop cracking in the forward pressure bulkhead, had been omitted.

The incidents have led to Australia's Civil Aviation Safety Authority (CASA) subjecting the airline to a special safety review.

'We understand the level of scrutiny we are being subjected to at present', said Mr Dixon.

'We will work through these issues and implement any changes that may be required, but our commitment to safety should never be questioned'.

'Qantas has an unrivalled safety record, and safety will always remain our number one priority'.

Mr Dixon will step down in November and be replaced by Mr Alan Joyce, the head of its Qantas's budget subsidiary Jetstar. -- AFP