Air France has announced measures to cut costs after reporting a fall in quarterly profits.

The company reported a net profit for the July-September period of 48m euros compared with 57m euros in the same period the previous year. The 2002 results had been modified, according to Air France, to reflect accounting changes in March this year.

Chair, Jean-Cyril Spinetta, said the half-year had been hit by the consequences of the Iraq war and the SARS epidemic; “Furthermore, even though there are now tangible signs of recovery, the sluggish economies in France and elsewhere in Europe continued to weigh on our activity in the second quarter.”

Air France says it is planning to cut unit costs by 6 per cent over the next three years, following its merger with KLM and through a restructuring programme of European passenger operations.

In October, Air France and KLM signed an agreement to create the world’s biggest airline in terms of sales. A new holding company will be called Air France-KLM with Air France owning 81 per cent of the group and KLM the remaining 19 per cent. Details: www.airfrance.fr