The flying kangaroo has reversed its financial woes, turning last year’s billion-dollar loss into a profit.

On Wednesday, Qantas posted a full year net profit of $557 million and an underlying profit of $975 million.

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Last year, the airline used an accounting measure to writedown $2.6 billion of value, resulting in a total $2.8 billion loss that shocked analysts and prompted speculation about CEO Alan Joyce’s future.

The underlying profit was Qantas’ best result since the global financial crisis and exceeded analysts’ expectations.

Qantas has not declared a dividend but will return $505 million to shareholders through a 23 cent per share cash distribution.

It will also carry out a share consolidation, which it says will have a similar effect to a share buyback.

Meanwhile, the airline has announced it will purchase its first Boeing 787-9 Dreamliners to replace ageing 747s in its international fleet, after years of postponing a decision.

Qantas will purchase eight Dreamliners, which will begin to arrive from 2017, and holds options or purchase rights over another 45 of the aircraft.

Chief executive Alan Joyce said Qantas was only halfway though its dramatic turnaround.

“We are halfway through the biggest and fastest transformation in our history,” he said.

“Without that transformation, we would not be reporting this strong profit, recommencing shareholder returns, or announcing our ultra-efficient Dreamliner fleet for Qantas International.”

All of the airline’s businesses reported stronger earnings for the year, including its long-troubled international division, which made a $764 million year-on-year turnaround.

The division reported underlying earnings of $267 million for the year, up from a $497 million loss a year ago.

Qantas’s domestic business lifted its earnings to $480 million, up from just $30 million a year ago.

Jetstar recorded underlying earnings of $230 million, up from a $116 million loss a year ago.

Meanwhile, Qantas’s loyalty business lifted its earnings to $315 million, from $286 million a year ago.

The airline’s return to profit comes after it launched a three-year transformation program that has included pay freezes for staff and the axing of 5,000 jobs.

QANTAS FLIES HIGH AFTER $3.3B TURNAROUND

* Revenue: up three per cent to $15.8b
* Net profit: $557m vs $2.8b loss
* Underlying profit: $975m vs $646m loss
* No final dividend