An additional report from Sydney Airport said a grass fire also ignited along one side of the runway.
It is unclear whether the two incidents were related. The fire has since been contained, though some flight delays are expected.
Qantas did not disclose the number of passengers on board the twin-engine Boeing 737-800, which was bound for Brisbane when the engine reportedly failed with a loud bang. No injuries were reported.
“We understand this would have been a distressing experience for customers, and we will be contacting all customers this afternoon to provide support,” stated Qantas Chief Pilot, Captain Richard Tobiano. “We will also be conducting an investigation into the cause of the engine issue.”