Falling sales hit Air France-KLM

The airline industry has seen slowing demand

Air France-KLM has posted a bigger-than-expected net loss between April and June as business class and freight traffic fell during the recession.

The airline lost 496m euros ($600m; £364m), compared with a profit of 149m euros for the same period last year.

It also suffered from losses on fuel hedging contracts that it bought last year when the price of oil was higher.

Europe's biggest airline said passenger numbers would continue falling before stabilising later this year.

"Global economic activity has stabilised at unprecedented low levels, leading to a sharp decline in volumes and unit revenues," the company said.

The difficult trading conditions also mean the airline is reviewing where it flies to.

"The group is undertaking a review of the medium-haul network, both in terms of destinations and products," it said.

This review will be implemented at the beginning of 2010, it added.

"The airline has to find a way of maintaining traffic and yields and still cut capacity to match demand.

"Throw in the pressure of forward hedging on fuel prices from last year's highs of $147, and it's clear that there is much more difficulty ahead, not less," said aerospace analyst Saj Ahmad.