The challenge for 2002 will be if we can make a net profit

Rob Ruijter KLM chief financial officer

KLM made a net loss of 156m euros ($142m; �97m) in the 12 months to 31 March 2002, compared to a profit of 77m euros in its previous financial year.

KLM cut 2,500 jobs in the days following 11 September and asked its staff to take a pay cut.

More seats sold

At that time, it said money lost on empty seats was outstripping savings from its cost-cutting programme.

But summer bookings "look encouraging" and the airline plans "to bring capacity back nearly to last year's level" in stages during May and June, chief financial officer Rob Ruijter said.

KLM relies heavily on the North Atlantic market, where it promotes Amsterdam's Schipol airport as a transfer hub to other European destinations and has a code-sharing alliance with US carrier Northwest Airlines.

It reported an improvement in passenger loads - the industry term for the percentage of seats filled - which rose 3.5% to 79.9% in the November to March period compared to year-earlier.

Average revenue per passenger rose by 1%.

'Challenge'

The airline posted operating losses of 94m euros for the 12 months to March, compared to profits of 277m euros in its previous financial year.

"The challenge for 2002 will be if we can make a net profit, it could well be a small net loss," said Mr Ruijter.

"We do however expect to make an operating profit."

Before 11 September, KLM's management had talked of seeking a tie-up with either British Airways (BA) or Air France.

However, Mr Ruijter ruled this out after the terrorist attacks, saying a merger was "impossible at this time as the long-term picture remains unclear".

The full year losses were slightly less than the consensus forecast of 178m euros feared by analysts.