KLM Royal Dutch Airlines has warned that it might make an operating loss because the troubled global economy and threats of war are affecting traffic.

"It is unlikely that a positive operating income for the fiscal year ending March 31, 2003 will be achievable," KLM said in a statement accompanying its December traffic figures.

Shares in Europe's fourth largest carrier fell by over 9%, before edging back.

The airline had previously warned it might not make a net profit for the year ending March but had forecast an operating profit.

Profit grounded

There is little hope of an improvement in the fourth quarter because of the high oil price, which has pushed up costs.

Chief executive Leo van Wijk had already warned in December that the company would have to cut cost to break even in the year to March 2004.

KLM said it would still have made a operating loss this financial year even if it excluded a fine of 250m euros (�162m; $260m) owed to former partner Alitalia.

KLM's performance was better than most of its rivals after September 11, with higher traffic numbers.

December's figures showed a slight fall, mainly in its cargo operations.