Air France-KLM is accelerating cost cutting measures and reducing investments after it announced a drop in profits caused by last year’s 14-day pilots strike.
The action over plans to expand the group’s low-cost subsidiary Transavia cost the airline around €425 million.
The strike action which was the longest in 20 years offset the benefits of lower fuel costs.
The airline said it was cutting investment by €600 million over two years and making 800 job cuts as well as speeding up its cost cutting targets.
Earnings fell €266m to €1.598 billion and revenues dropped 2.4 per cent to €24.91 billion despite a 1.3 per cent increase in passenger numbers.
"With the way we see the market developing, except for the North Atlantic, we are being very, very cautious," said chief executive Alexandre de Juniac.
De Juniac added that he wanted a “deep transformation” in the company.
Air France-KLM said it was sticking to its ‘Perform 2020’ plan which will see the group invest €1 billion in growing its low-cost brand Transavia.
'Perform 2020' is expected to create 250 new pilot jobs by 2019 and grow Transavia's fleet to over 100 aircraft.
The development of Transavia will accelerate in 2015 - capacity rising 30 per cent in France with a network of 44 destination from Paris, a new brand identity, website and order for 20 Boeing 737s.
“Transavia will maintain its own operating and remuneration conditions, which are key to achieving its unit cost and operating flexibility objectives,” the group said.