KLM is stuck in the doldrums

KLM has Europe's largest exposure to Asian destinations where the Sars virus has added further gloom to the travel industry.

KLM said the Sars virus had wiped out more than a third of its travel on key Asian routes. It added that visits to the Middle East had picked up since the end of the war with Iraq.

But chief executive Leo van Wijk said the group's troubles were far from over.

"If there is (a recovery) it is only very marginal and it's too early to be optimistic."

Alitalia dispute

KLM said it carried 35% fewer passengers to Asia in May, although its overall passenger load factor - the percentage of filled seats -fell 3.5% to 73.7%.

That was after the airline had cut overall capacity by 5% and by 12% in Asia.

Mr van Wijk's "lousy" comments came as officials from Italian flag carrier Alitalia prepared for talks with unions and the Italian Government over proposed job cuts.

Hundreds of flights have been cancelled in recent days because of a dispute over whether planes should be staffed by smaller cabin crews.

The airline's chief executive was quoted in Corriere della Sera newspaper as saying the cuts were necessary if the company was to tackle its financial crisis.

German rival Lufthansa on Sunday gave a more upbeat assessment of prospects, saying it was using reserve planes again after an upturn in passengers.

Lufthansa chief executive Juergen Weber told Reuters the worst could be over for the hard-hit airline industry.