Australia\'s Qantas banked compensation from Boeing for Dreamliner delays and slashed international losses on Thursday, reporting a surge in six-month net profit, but warned of turbulence ahead. The flagship carrier also announced a fleet upgrade, after last year posting its first annual loss since privatisation in 1995 amid tough competition, industrial action and high fuel costs. Over July-December 2012, Qantas said overall net profit jumped 164 percent from the same period in 2011 to Aus$111 million (US$114 million), and it underlined a strategic focus on Asia under a new alliance with Emirates. The company offered no profit guidance \"due to the high degree of volatility and uncertainty in the competitive environment, global economic conditions, fuel prices and foreign exchange rates\". Nevertheless Sydney investors welcomed the earnings news on a day of overall losses, driving Qantas\'s enfeebled share price up 2.8 percent to Aus$1.66. Peter Borkovec of White Funds Management said investors expected a recovery in Qantas\'s fortunes. \"It\'s about where the company is coming from and whether its strategy is heading in the right direction,\" the fund manager said. \"Investors can see it\'s working, and given Qantas\'s low valuation you can understand why the market is taking this positively.\" Overall, underlying profit before tax -- the airline\'s preferred performance measure -- rose 10 percent to Aus$223 million, on revenues of $8.24 billion. The group\'s ailing Qantas International arm reported underlying pre-tax losses of Aus$91 million, an improvement of Aus$171 million. But that improvement included Aus$125 million from the August restructuring of the group\'s B787 Dreamliner order, with the troubled Boeing plane suffering lengthy production delays. It is now grounded worldwide over a safety scare. Also included was Aus$30 million from the sale of a local unit. \"Qantas International is well advanced in its turnaround plan,\" group chief executive Alan Joyce told a news conference, pointing to cost-cutting and closure of loss-making routes. And underlying pre-tax profit for the domestic service was halved to Aus$110 million, in what Joyce called a highly competitive field where rivals have pumped up capacity to claim market share from Qantas. He forecast capacity growth of five to seven percent for Qantas in the first six months of 2013. Moody\'s ratings agency said Qantas remained one of few investment-grade rated carriers globally and its Baa3 rating continued to reflect the airline\'s strengths, strong domestic franchise and sound liquidity. \"The company has very importantly shown positive traction in executing on its international business transformation which we see as being core to the maintenance of its investment grade rating\", said Ian Lewis, a Moody\'s vice president. \"At the same time we see challenges ... in maintaining yield in the domestic market where it has drawn a line in the sand at 65 percent market share and is showing some evident yield and load weakness.\" Qantas also announced orders for five new Boeing 737-800s for 2014 delivery and the upgrade of 30 Airbus A330s. \"Growing with Asia is a major priority for the Qantas Group and this investment underpins our commitment to the region,\" a statement said. The Asia expansion will be underpinned by the Flying Kangaroo\'s alliance with Dubai-based Emirates, freeing services to Asia from onward links to Europe. Macquarie Equities analysts say the deal could bring in Aus$240m for Qantas.