Europe's largest airline by revenue said its April-June operating loss widened from a year ago to 145 million euros but predicted it would still be able to eke out a positive result for the year. Revenue rose 8.7 percent to 6.22 billion euros.
Analysts were on average expecting a quarterly operating profit of 47 million euros on revenue of 6.264 billion and a net loss of 41 million, according to Thomson Reuters I/B/E/S data.
Turmoil in North Africa and the Middle East and the aftermath of the Japanese earthquake, tsunami and nuclear crisis in March all combined to cause 100 million euros in losses.
Those factors also weighed on Germany's Lufthansa , which scraped a small profit in the first half.
Air France-KLM added the European debt crisis to a list of jitters affecting business travel and the movement of goods.
"The operating environment remains uncertain due to the situation in Japan, Africa and the Middle East and the euro zone crisis," the group said in a statement on Wednesday.
"Moreover, fuel prices are still at high levels and the euro remains volatile."
Air France-KLM said it was halving its plans for long-haul capacity growth in the winter to 2.7 percent from 5.1 percent to shore up its preserved goal of an operating profit in 2011.
Air France-KLM is in the midst of switching from an April-March fiscal year to a normal calendar year, so the 2011 reporting period will be truncated. Next year's figures will be produced in tandem with Lufthansa and other airlines.
Fuel Costs
Air France-KLM passenger traffic rose 9.4 percent in April-June after adjusting for the six-day closure of European airspace due to the Icelandic ash crisis in April 2010.
Air cargo, a key economic barometer, was hit by the Japanese crisis and overcapacity in China, with traffic up just 1.9 percent in the past quarter.
Also weighing on the industry are fuel costs and an uncertain global economy that could stifle recovery.
Alliance partner Delta Air Lines , which has a joint venture with Air France on North Atlantic routes, saw its shares hit as fuel costs outpaced increased revenue.
Air France-KLM said its unit costs were stable after a latest round of cost cuts and declined 3 percent at constant fuel and exchange rates. But its fuel bill rose 16 percent.
The airline is pushing some short-haul operations out to provincial French cities to help drive down costs further.
It faces a possible four-day pilot strike over wider pension reforms for Aug. 5-8 though a cabin crew strike that threatened disruption over a big travel weekend has been called off. (Reuters)
