Qantas will axe 5000 jobs after posting a $252 million first half loss.
The airline says the job cuts are part of its a bid to cut $2 billion in costs over three years.
It also says it will cut capital expenditure by $1 billion over the next two financial years and is planning big changes to its fleet and network.
Meanwhile, Qantas has announced it would hand back its Brisbane Airport lease for $112 million, though it will retain exclusive use of most of northern end of terminal until 2018.
Of the planned job cuts, Qantas says 1500 will come from management and non-operational roles.
The remainder of the losses will come as a result of changes to the fleet and network, the restructure of maintenance operations and the restructure of catering facilities.
Wages for all staff will be frozen, while chief executive Alan Joyce has already taken a 36 per cent pay cut.
The airline says more than 50 aircraft will be deferred or sold, with older planes like 747s to be retired early and orders of A380s and B787-8s to be delayed.
It will also axe underperforming routes including its Perth to Singapore service, while timing and aircraft changes will be made to other routes.
The underlying $252 million loss is at the bottom end of the $250 million to $300 million loss the airline flagged in December.
But it is a sharp deterioration from the $192 million full-year underlying profit it recorded for the 2012/13 financial year.
Mr Joyce said the result was unacceptable and required tough decisions.
"We must take actions that are unprecedented in scope and depth to strengthen the core of the Qantas Group business," he said.
Australian Greens MP Adam Bandt fears Australian money and jobs could be on the next 747 flight to Singapore or Kuala Lumpur, if foreign ownership rules are relaxed.
He repeated calls for any government assistance to come with strings attached to protect jobs.
Independent MP Bob Katter is concerned about aircraft maintenance being sent overseas.
He said foreign workers paid $30,000 to repair aircraft won't fix Australian planes to proper standards.
"Qantas has never had an accident yet every other airline has fallen out of the sky," he told reporters.
Labor backbencher Robert Mitchell, who has scores of Qantas workers in his electorate near Melbourne's Tullamarine Airport, fears many could face unemployment.
"There's still many people in my communities who are ex-Ansett staff who are struggling to find work," he said.
Qantas shares fell four cents, or 2.8 per cent, to $1.23 at the start of trading on Thursday.
Mr Joyce said the airline continued to see major opportunities for its subsidiary Jetstar in Asia, despite challenging conditions and calls for it to exit the market.
However, he said Jetstar Asia would suspend its expansion in Singapore until conditions improved.
"Jetstar has been a pioneer Australian brand across Asia and we continue to see major opportunities for it in the world's fastest-growing aviation region."
Mr Joyce again hit out at rival Virgin, which counts three foreign airlines - Etihad, Singapore Airlines and Air New Zealand among its owners.
"The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines yet retain access to Australian bilateral flying rights," he said.
"Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia.... that capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses."
Qantas said it had a total liquidity of $3 billion, including $2.4 billion in cash reserves.