* To repay A$650 mln in debt early, buy back A$100 mln in shares
* Says share price does not reflect value of company
* Expects H1 underlying pre-tax profit of A$180-A$230 mln
* No H2 outlook due to global economy, fuel prices, FX
* Shares rise 6.5 pct in weak market (Adds detail, shares, comment)
SYDNEY, Nov 15 (Reuters) - Australia's Qantas Airways will repay A$650 million ($675 million) in debt ahead of schedule and buy back up to A$100 million in shares, saying the market is undervaluing the business after a slump in its share price.
Qantas has been battling high fuel costs, tough competition at home and a strong Australian dollar that has dented tourism spending. It announced plans in September to tie up with Dubai's Emirates to shore up its loss-making international business.
"The board believes the current Qantas share price does not reflect fair value of the group, particularly considering the underlying strength of its domestic, loyalty and Jetstar businesses and the proposed partnership with Emirates," Qantas Chairman Leigh Clifford said in statement on Thursday.
In addition to the planned Emirates alliance, Qantas has been cutting jobs, cancelling plane orders and selling non-core assets to boost its balance sheet and reduce operating costs.
Qantas shares rose 6.5 percent to A$1.31 in a weak market in early trade. The stock slumped to A$0.96 in June, the lowest since privatisation in 1995 and down from above A$6 in 2007.
Some analysts were surprised to see Qantas' plan to buy back shares.
"The balance sheet might be okay today, but it's the future requirement for capital on the balance sheet which is still very high," said Akshay Chopra, an investment analyst at Karara Capital.
"To buy back stocks today, it just seems bizarre really."
The carrier posted an annual net loss of A$244 million last year, its first since being privatised.
Qantas said it expected to report an underlying profit before tax for the six months ending 31 December 2012 in the range of A$180 million to A$230 million, versus A$202 million a year ago.
"The outlook for the second half of FY13 remains volatile and, given the uncertainty in global economic conditions, fuel prices and foreign exchange rates, it is not possible to provide further guidance at this time," Qantas said.
Analysts are expecting a pre-tax profit of A$385 million for the year to end-June, 2013 according to the consensus forecast from Thomson Reuters I/B/E/S.
Standard & Poor's cut its rating on Qantas to BBB-minus in September. That is still investment grade, making Qantas one of only two investment grade airlines in the world, along with Southwest Airlines.
$1 = 0.9630 Australian dollars Reporting by Lincoln Feast; Additional reporting by Maggie Lu Yueyang in Canberra; Editing by Richard Pullin