Air France-KLM posted a narrower than expected fourth quarter loss this week after capping staff costs and cutting capacity as it awaits for elusive signs of a recovering in passenger andcargo traffic.

Europe’s largest airline by revenue reported a fiscal fourth quarter net loss of €505 million (US$698.3 million) and a full-year net loss of €814 million compared with a €1.4 billion full year profit a year earlier, as a result of the ongoing global economic crisis.

The group’s cargo division posted an operating loss of €206.8 million (US$286 million) in cargo revenue for its 2008/2009 financial year compared to a profit of €42 million in the previous 12 months.

Excluding Martinair, which became a wholly-owned KLM subsidiary at the end of 2008, total cargo revenue for the group was €2.8 billion – a drop of 2.4 per cent over the previous period.

Cargo contributed 14.9 per cent of Air France-KLM total airline revenue in the 12 month period to March 31 – down from 15.2 percent the previous year.

But chief executive Pierre-Henri Gourgeon said there were some signs that the declining traffic may have bottomed out. “Since 6 to 8 weeks ago we have seen some stabilisation of the crisis in passenger and cargo, but no sign of recovery yet,” Gourgeon said.

But the group added that despite signs of market stabilisation, “it is too early to tell whether they indicate the start of an economic recovery. We therefore continue to take appropriate measures to protect our business, including a reduction in capacity of 11 per cent in cargo for summer ’09.”