Months after shareholders and unions were demanding Mr Joyce quit as Qantas CEO after a $2.8 billion loss, he is firmly back in favour after forecasting a half year underlying profit in the range of $300 to $350 million.

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The announcement sent Qantas shares soaring 14 per cent (29 cents) to close at $2.39, and had even unionists acknowledging the surprisingly good result.

Qantas A380...the Flying Kangaroo is flying high once more. Picture: Supplied. Source: Supplied

Mr Joyce said the figures represented a $550 million improvement on the first half last year and were a clear sign the Qantas Transformation program was on track.

“Thanks to the hard work of our people, we are delivering the cost and revenue-focused initiatives needed to strengthen our business, without compromising the premium service that matters to our customers,” said Mr Joyce.

The transformation program includes 5000 job cuts to help deliver $2 billion in savings and is about a third of the way through.

Oliver Lamb from Pacific Aviation Consulting said the fleet rationalisation undertaken by Qantas and increased utilisation of aircraft had made a world of difference to the airline.

Peace...A truce in the capacity war between Qantas and Virgin Australia has made a big difference to the Flying Kangaroo’s bottom line. Picture: News Corp Australia Source: News Corp Australia

“This is a remarkable result and Alan Joyce has turned Qatnas around from one of its worst losses in history to one of its best first halves in history,” said Mr Lamb.

“By retiring some of these larger, expensive aircraft and replacing them with cheaper, smaller aircraft, they’ve achieved a capacity reduction which helps improve yields.”

He said the most extraordinary part of the announcement was the return to profit of Qantas International, which finished 2013-14 almost $500 million in the red.

“What’s been really interesting is the Australian dollar has weakened but Australians’ appetite for overseas travel hasn’t,” Mr Lamb said.

“We’re in a sweet spot; it’s a magic pudding combination that holds up for Qantas internationally and domestically.”

Turnaround...Qantas CEO Alan Joyce was upbeat at the group’s AGM in Melbourne in October, for good reason as it turned out. Picture: News Corp Australia Source: News Corp Australia

The informal truce with Virgin Australia in relation to domestic capacity had also played a part, said Mr Lamb.

“They’ve restricted capacity in the marketplace and Virgin has participated in that,” he said.

“Both airlines are coming up for air and while that’s good for them, there’s also less seats in the market and prices are higher.

“Consumers are probably paying higher prices domestically now.”

Steve Purvinas from the Australian Licensed Aircraft Engineers Association said the reduction in capacity and jet fuel prices had contributed most to the Qantas turnaround.

“The announcement of a possible profit is good news for everyone,” said Mr Purvinas.

Air New Zealand CEO Christopher Luxon said the airline industry went through cycles and currently the cycle was on the up.