''There were some signs of recovery in activity during the third quarter, but in an economic environment which remains difficult,'' the airline said in a results statement.

The group recorded a net loss of 295 million euros ($405 million) in the third quarter, which ended December 31, but it was an improvement from a loss of 508 million euros during the same period in 2008.

It also posted a 245-million-euro operating loss for the third quarter, the same as the previous year.

Analysts had expected another loss due to high fuel prices and

losses in short- and medium-haul flights, but it was heavier that their forecast of a loss of 216 million euros.

''The operating loss for the Fourth Quarter should be of the same order as last year's,'' or 574 million euros, Air France-KLM said.

The airline attributed the dreary outlook to a later-than-expected pick up in unit revenues, a drop of two percent in passengers and seven percent in cargo and an increase of 300 million dollars in the fuel bill.

The company said it expected to break even operating-wise in its 2010-2011 fiscal year.

''All the measures to reduce costs, the anticipated slight progression in unit revenues, the launch of the new medium-haul product and the restructuring of the cargo business already underway enable us to target the objective,'' it said.