Chief executive Alan Joyce said conditions had seen a "marked" deterioration and the airline was battling "extraordinary circumstances", including record fuel costs, a strong Australian dollar and fierce competition from subsidised rivals.
Qantas shares plummeted 17.26% to 99.5 cents on the news, which comes just months after the carrier returned to a modest Australian dollar 5 million annual profit in August following a strategic tie-up with Emirates.
"The challenges we now face are immense," Joyce said in an update to the Australian stock exchange.
"Since the global financial crisis, Qantas has confronted a fiercely difficult operating environment -- including the strong Australian dollar and record jet fuel costs, which have exacerbated Qantas' high cost base," he added.
"The Australian international market is the toughest anywhere in the world."
Joyce said Qantas expected to report a loss before tax in the six months to December 31 of Australian dollar 250-300 million, with passenger loads slipping significantly in November as increased competition drove down the Australian carrier's market share.
Fuel costs for the half-year were Australian dollar 2.27 billion -- Australian dollar 88 million higher than in the second half of 2012.
"Urgent" action was needed to salvage the Flying Kangaroo's profitability, Joyce said, including the sacking of "at least 1,000" staff, a cut to his own pay and that of the Qantas board, a review of spending with top suppliers and a salary and bonus freeze.
"We have reduced the group's unit costs, excluding fuel, by a total of 19 per cent since FY 09, including by five per cent in FY13. But these actions are not enough to deal with the current situation," he said.
Joyce said "no options will be off the table" as he continues lobbying for a more even playing field in Australia's aviation sector, including the easing of foreign investment restrictions or government intervention to shore up Qantas.