Air France-KLM today blamed higher fuel costs and tough price competition as it posted a deeper first-quarter loss that caused its shares to fall.
The Franco-Dutch group reported a 1.9% drop in unit revenue for January-March, as sales failed to keep pace with its 2.3% expansion in flights offered.
However the company said pressure would ease in the rest of the year as rival airlines' capacity growth slows.
The operating loss widened to €303m from €118m, and Air France KLM's shares fell by around 3% in early trading.
Under new chief executive Ben Smith, who joined last September from Air Canada, the company is seeking to boost efficiency in part through better coordination of the Air France and KLM networks and fleets.
"The first quarter has been challenging for the European airline industry including the Air France-KLM Group," Smith said in a statement.
"Substantial industry capacity growth in the off-peak business period led to unit revenue pressure," he said.
Fuel costs and excess capacity also led to ballooning losses at Lufthansa, the German airline said this week.
Air France-KLM said it saw "improving trends" and a "more benign industry supply outlook" - with a slowdown in Gulf carriers' growth plans - as it reiterated pledges to keep a lid on debt in 2019 while continuing to cut non-fuel costs.
The airline's fuel bill grew by €140m to €1.2 billion in the quarter, Air France-KLM said, putting a bigger-than-expected dent in earnings.
The €303m operating loss exceeded the €251m expected by analysts, based on the median of 14 estimates in a consensus poll by the company.
Its net loss also widened to €320m from €269m, despite group revenue rose 3.1% to €5.986 billion, in line with market expectations.
Non-fuel costs fell 0.4% before currency effects, which pared another €34m off earnings.
But forward long-haul bookings are up for the summer season, the company said, with gains of 1% for May and June.
Transavia, the group's low-cost operator, saw unit revenue decline 3.5%, as a 7.4% passenger traffic hike failed to keep pace with an 11.4% capacity expansion - partly the result of a later Easter weekend this year.
The division's loss widened to €71m from €58m.
Beyond the financial metrics, CEO Smith hailed what he described as "signs of progress in operational performance at Air France", as the carrier improved punctuality and overall customer satisfaction scores - narrowing the gap with KLM.
