* Shares rally 6 percent on smaller-than-expected loss
* Further cost cuts of A$1.5 billion planned
* No profit guidance for FY10, outlook uncertain (Adds analyst comment, details)
By Victoria Thieberger
MELBOURNE, Aug 19 (Reuters) - Qantas Airways Ltd, Australia's largest carrier, pointed to early signs of a pick-up in air travel after posting its first half-year loss in six years as the industry battled the worst global recession in decades.
But the loss was smaller than analysts expected, and comments that yields, which measure revenue per miles travelled, have stabilised helped lift the airline's shares by as much as 6 percent.
The cautious outlook came as airlines around the world have been cutting capacity and jobs to deal with the slump in business and holiday travel, aggravated by the outbreak of the H1N1 swine flu virus.
"Everybody was assuming the worst and Qantas delivered a slightly better than expected result," said Constellation Capital Management investment analyst Brian Han.
"But they made it pretty clear the yields stabilised at a pretty low level so it's not much to sing about," he added.
The airline also announced further cost-cutting measures totalling A$1.5 billion over three years, but the group baulked at giving a profit outlook, saying business conditions were too uncertain.
It swung to a loss of A$93 million ($77 million) in the six months to June 30 from a profit of A$351 million a year ago, according to Reuters calculations.
It was the first loss for a six-month period since the SARS outbreak in 2003, and only the second since Qantas listed on the stock exchange in 1995.
By 0216 GMT, Qantas shares were up 5 percent at A$2.73 after rising as high as A$2.77, compared with the broader market up 0.8 percent.
Qantas's five-year credit default swaps, which offer protection against defaults on debt, tightened but in line with the rest of the market. They were quoted at 163 basis points on Wednesday, down from 170 bps on Tuesday, according to a RBS trader.
Still, Qantas Chief Executive Alan Joyce said there were signs of an improvement in passenger volumes, and yields had stabilised at levels seen in the six months to June, when demand for travel was hit by the economic slowdown.
He also announced plans to lease extra capacity for the budget carrier Jetstar.
The International Air Transport Association forecast in June that global airlines could lose $9 billion this year, nearly double its previous estimate.
Singapore Airlines, the world's second largest airline by market value, recently posted its first quarterly loss in six years and said it could make a loss for the full year if tough conditions persisted.
Cathay Pacific Airways, Hong Kong's top carrier, said this month it had swung back to profit in the six months to June, but warned of strong headwinds ahead.
For the year to June 30, Qantas managed to eke out a pretax profit of A$181 million, down 87 percent but beating analysts' forecast of A$143.5 million, according to estimates tracker IBES. The result was helped by a better-than-expected performance of its frequent flyer programme and Jetstar.
Constellation's Han noted that Qantas has outperformed its regional peers given the difficult operating environment.
"They are protected to some extent, because they are the dominant one in a duopoly structure in the domestic market, which provides a defensive shield to their international operations," he said.
Qantas said it would take four additional A330-200 aircraft on six-year leases for Jetstar for long-haul international travel, with the first to be delivered in November 2010.
Qantas made cutbacks to capacity and jobs in April and cut airfares to deal with the downturn, and CEO Joyce told reporters on Wednesday the airline was braced for an uncertain outlook.
"If things do improve, we will be in a position to aggressively grow again and take on aircraft to take advantage of that... If things got worse and who knows what could happen, then every option has to be on the table," he said. (Editing by Jean Yoon)