Air France-KLM said it expected profits to fall this year due to the effect of strikes at its main French unit, which are forcing it to rein in growth and mean it can not take advantage of a generally benign backdrop for airlines.
European airlines are currently enjoying high demand for tickets thanks to robust economies, which has helped to ease the pressure on fares.
However, Air France-KLM said today that its first quarter loss had widened to €118m compared to a restated loss of €33m a year ago.
The results came as Air France staff staged a 13th day of walkouts this year and come hours ahead of a crunch ballot for the group's chief executive, who has said it would be hard for him to stay if staff vote against the pay proposal.
"What I regret is that the year started well in commercial terms, demand was there," the airline's chief financial officer Frederic Gagey said.
"It's a great shame, and I think a majority of Air France staff feels this way too, that we are not able to take advantage of this environment," he added.
Reflecting the benign market backdrop, profits at the KLM unit, which typically has a lower cost base and therefore achieves higher profit margins than the Air France business, improved by €32m to €60m.
Overall group unit costs in the quarter rose 2.1%, of which 1.7% was related to the strikes.
Air France-KLM said adjusted unit costs would now rise this year by 0-1%, against previous expectations for a drop of 1-1.5%.
Capacity growth will now be 2.5-3.5% compared to previous plans for 3-4% growth.
Along with those elements, the strikes, rising fuel prices and currency headwinds, operating profit for 2018 would now be notably below 2017's level, added the company.
Last year, the group made an operating profit of €1.488 billion, although that has been restated to €1.9 billion due to IFRS accounting rule changes.
The company has so far estimated that the strikes have cost it some €300m. Each day of strikes costs about €25-30m and a further four days have been called for May so far.
In order to try to bring an end to the dispute, Air France is balloting staff directly over its offer of a 7% pay rise over four years, after unions rejected the proposal.