Air France-KLM on Monday fell further into the red, reporting a second quarter loss of 895 million euros ($1.1 billion) as it set aside 368 million euros in provisions to meet restructuring costs.
The result, compared with losses of 197 million euros during the same period last year, highlighted the need for its restructuring, it said.
"In an increasingly uncertain global economic environment compounded by oil price and exchange rate volatility, an improvement in our productivity and costs is even more necessary," group chairman Jean-Cyril Spinetta said in a statement.
The struggling airline launched a three-year turnaround strategy in January aiming to save 2.0 billion euros by 2015.
Revenues rose 4.5 percent during the three months ending June to 6.5 billion euros.
Despite the headline loss increase, the market welcomed the company's comments that it expected a better performance in the second half of the year, pushing the shares up by some 8.0 percent in a slightly firmer market.
Additionally, the airline said its second quarter operating loss fell to 66 million euros from the year-earlier 145 million euros.
"The main point in the past quarter was that the core business (carrying passengers) has held up well and so far, has not been affected by the global economic slowdown, and more particularly by the slowdown in Europe and France," finance director Philippe Calavia told a conference call.
Calavia said passenger traffic picked up 2.4 percent to 55.4 million in the second quarter while capacity increased only slightly but the cargo was under pressure, with freight carried down 6.9 percent in the three months.
The increase in the net loss reflected restructuring charges, most of which cover voluntary staff departures, Calavia said, adding that there might be additional costs although most were now done.
The company also lost 372 million euros on its fuel hedging operations, he said, while noting that debt fell 280 million euros to 6.52 billion euros.