(Recasts, adds CEO quote and background)
SYDNEY, Feb 23 (Reuters) - Qantas Airways Ltd QAN.AX , Australia's biggest airline, on Thursday posted a 7.5 percent fall in first-half underlying profit and deferred deliveries of Airbus SE AIR.PA aircraft as international competition intensified and domestic market conditions remained weak.
Underlying pre-tax profit, its most closely watched measure, totalled A$852 million ($656 million) for the six months to Dec. 31, down from A$921 million a year earlier but ahead of the guidance range of A$800 million to A$850 million given in October.
"In the international market, conditions are challenging," Qantas Chief Executive Alan Joyce said in a statement. "As travellers are very much aware, cheaper oil has led to strong capacity growth on international routes - pushing fares down and impacting all major airlines."
International rivals Cathay Pacific Airways Ltd 0293.HK , Singapore Airlines Ltd SIAL.SI and Air New Zealand Ltd AIR.NZ have also reported a decline in profits in their passenger businesses as airfares fall due to overcapacity on key routes.
Qantas said it would push back the delivery date for the first of 99 Airbus A320neo aircraft to be used by its low-cost Jetstar division until the financial year ended June 30, 2019, having previously expected to receive the first aircraft by the end of this calendar year.
It follows a similar move by rival Virgin Australia Holdings Ltd VAH.AX , which postponed the delivery of new Boeing (NYSE:BA) Co BA.N 737 MAX aircraft for at least a year after reporting a 48 percent decline in underlying earnings last week. said the decline in revenue in the international market was expected to moderate in the second half of the financial year. Unit revenue at a group level declined 5 percent in the first half.
Qantas announced an interim 50 percent franked dividend of A$0.07 a share, having eschewed a dividend in favour of a A$500 million share buyback a year ago when it lacked enough tax effective franking credits.
($1 = 1.2980 Australian dollars)