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Carrier predicts third quarter losses
Air France KLM, the largest airline in Europe, has warned that it expects to post a third quarter operating loss.
But it said it still hoped to report an operating profit for the full financial year ending March 31 although it may not be as high as previously expected.
The airline blamed the economic downturn, falling demand and a loss on fuel price hedging for the expected loss.
In a statement, AF-KLM said: "The deterioration in the economic environment during the third quarter has led to a slight weakening in passenger unit revenues and a strong decline in cargo revenue.
"Unit costs were not able to benefit from lower oil prices because of the negative effect of the oil hedges."
This is the airline's third warning on its profits for the year.
It withdrew its full years earnings forecast last November after earlier saying it would not reach its 2008-2009 operating profit target of €1bn.
But at the time it said it still expected a positive result.
Like other airlines AF-KLM has cut capacity and reduced costs as the recession took hold and demand dropped.
But the carrier has also just paid out €323m for a 25% stake in the newly re-vamped Alitalia.