Qantas this morning posted some shockingly bad operating figures for the month of August, but under the surface things may be improving for the airline group.

First, the bad news. In the financial year to the end of this August, international yields fell by –22.9%, continuing a run of significantly loss-making months this calendar year.

On the domestic operations, yields were down on the same basis by –12.9%. It will take another strong profit from the sale of so-called loyalty or frequent-flyer points to third parties to reduce the losses being incurred by actually flying people.

These figures include Jetstar in both cases, meaning the situation for Qantas on its own was worse than the aggregate figures, but the company isn’t providing a breakdown, which shareholders ought to be demanding at the October 21 AGM in Perth.

Further to the bad news, Qantas international passenger numbers fell by –25.9% in August compared to the same month in 2008, and there has been guidance that premium fare numbers have fallen disproportionately more than in discount economy.

However, overall, the group’s passenger numbers rose 6% in August compared to August 2008, clearly lifted by growth by Jetstar.

This homogenising of the dual brand operating figures for Qantas and Jetstar obscures for investors the real situation for the group in a very stressed market.

The situation in August is that Qantas domestic by head count carried 1.8% more passengers than a year earlier, Jetstar domestic carried 1.3% more, Qantaslink carried –0.2% fewer, Qantas international lost –25.9% of the passengers carried that month compared to a year earlier and Jetstar international more than doubled its passenger uplift.

The dismal yield figures did not take anyone in Qantas management by surprise. The official profit guidance for this financial year is that there is “no” guidance.

The underlying good news, alluded to by CEO Alan Joyce more than once in recent weeks, is that a large volume of very cheap seats sold toward the end of the past financial year for future travel, particularly for the Christmas-New Year holiday period, have yet to work their way through the group’s operations and will distort or mask the yields being earned by the group since then, and until all the cheapies have been used up.

This somewhat fragile basis for optimism has also been resorted to by Virgin Blue and major overseas carriers in terms of tentative signs of recovery or stability in the air travel markets.

Nevertheless, Qantas, and its major competitor Virgin Blue, are only days away from Singapore Airlines-controlled Tiger Airways getting serious about the Australian market, when it boosts capacity and frequency to business travel-friendly levels on the prime Melbourne-Sydney market.

That development makes short-to-medium-term predictions for the Australian domestic market very problematic.

See Crikey Blog Plane Talking with Ben Sandilands.