Adds fresh CEO quotes in paragraphs 6-7, 12

By Sameer Manekar and Byron Kaye

Aug 28 (Reuters) - Top Australian airline Qantas QAN.AX said annual profit jumped by nearly one-sixth as a post-pandemic rebound in domestic travel persisted and flagged higher fares in the current financial year, sending its shares to a record high.

The result and the sharemarket reaction to it show a company riding a tailwind of improved macroeconomic conditions as it seeks to rebuild its reputation after a series of damaging scandals.

The so-called Flying Kangaroo said it expected domestic fares to rise up to 5%, and international flights up to 3%, in the first half of the new financial year.

Underlying pre-tax profit for the year to end-June rose 15% to A$2.39 billion ($1.6 billion) on the prior year, broadly in line with analyst forecasts.

The company declared a final dividend of 16.5 Australian cents a share, the highest total payout in 17 years, and said it would add another 9.9-cent special dividend.

"Australians' love of travel continues, demand remains strong," CEO Vanessa Hudson told reporters in Sydney.

"Zoom and Teams have not ended the need for face-to-face business meetings," she added, noting demand for domestic business travel was close to the level just before COVID-19 shut down most air travel almost overnight in early 2020.

Qantas shares surged more than 12% in morning trade, making it one of the top performers on the broader market .AXJO which was flat.

"Hudson inherited a mammoth challenge in balancing shareholder returns, rebuilding trust with consumers, and satisfying regulators," said Josh Gilbert, an analyst at trading platform eToro.

Hudson became CEO in 2023 as Qantas faced a blizzard of negative headlines. In May last year Qantas settled a lawsuit from the Australian Competition and Consumer Commission accusing it of selling thousands of fares to flights that had already been cancelled. Earlier this month it was fined a record A$90 million for illegally sacking 1,800 ground staff during the pandemic.

"We have taken lessons away from this," Hudson told the media conference, asked about the fine. "We remain committed to rebuilding our relationship with unions to one that is constructive."

The result showed that while demand for flights was surging, so was the appetite of travellers for cheaper fares. Pre-tax earnings from its domestic unit were flat on the prior year and from international flights were up 7%, but pre-tax earnings from its budget arm, Jetstar, jumped 55%.

Qantas placed an order for 20 additional Airbus's narrowbody A321XLR aircraft as part of its broader ongoing fleet renewal program.

($1 = 1.5389 Australian dollars)

(Reporting by Sameer Manekar and Roshan Thomas in Bengaluru; Editing by Stephen Coates)

((Sameer.Manekar@thomsonreuters.com;Roshan.Thomas@thomsonreuters.com))