Air France-KLM became the first major European airline to issue a profit warning since the financial storm broke in the summer, sending its shares down 10 percent as the industry reported its worst demand in 5 years.
Europe's largest airline group, and the world's largest by revenues, said today it would be "very difficult" to reach a target of €1 billion operating profit this financial year.
However the airline, which has so far weathered the crisis better than many rivals, said it would remain "comfortably" in the black as long as market conditions did not get worse.
The economic malaise showed few signs of easing as European stocks ignored an attempted recovery on Wall Street and fell by an average 5 per cent on a slew of warnings and bad results.
Air France-KLM shares fell 9.8 per cent to €10.7 in the first few minutes of trading and were briefly suspended.
At 10.17am they were down 8.9 per cent at €10.81, lagging a French blue-chip CAC40 index down 6 per cent.
To shore up profitability, Air France-KLM said it would boost its existing 'Challenge 10' cost-saving plans by another €100 million on top of €190 million earlier this year.
Finance director Philippe Calavia said in a speech to investors that work had started on a new plan calling for additional cumulative cost cuts of €700 to €800 million by 2011-2012 and of €1.1 to €1.2 billion by 2013-14.
"The group will also review its investment program in order to adapt to the decline in capacity and protect its balance sheet," Air France-KLM said in a statement afterwards.
Air France-KLM posted operating profit of €234 million in its first quarter to end-June.
Reuters