By Victoria Bryan
BERLIN (Reuters) - Air France-KLM (PA:AIRF) said pressure on ticket prices and negative currency effects would offset virtually all the benefits of lower fuel prices this year after it reported a narrower first-quarter operating loss.
Like Lufthansa (DE:LHAG), Air France-KLM is battling with unions to cut costs amid tough price competition in Europe and is cutting back on investments to bolster its finances.
Air France-KLM said its first-quarter operating loss narrowed to 417 million euros (300 million pounds) from 445 million a year ago as it cut short and medium-haul capacity at its main passenger network.
Analysts had on average expected a loss of 424 million euros, according to a company-compiled consensus.
The Franco-Dutch carrier said on Thursday that revenue remained under pressure on its east African and Asian routes, where rivals have been offering more seats.
Currencies had a negative impact of 81 million euros on operating profit in the quarter, Air France-KLM said. Like other European airlines, it is losing some of the benefit of lower fuel prices, which it buys in U.S. dollars due to the weak euro.
It said it expected a fuel bill of 6.6 billion euros for 2015 and around 6.1 billion for 2016.
It confirmed a target to reduce unit costs by between 1 and 1.3 percent this year, and said talks with unions on improving productivity were ongoing.
Air France-KLM has already said it would cut planned investments by 600 million euros over the next two years as it tries to tackle weak margins.
Lufthansa is also cutting back on investment and said on Wednesday it was delaying investment in a new cargo centre at its Frankfurt hub.
Air France-KLM said net debt would total around 4.4 billion euros at the end of 2015, helped by the sale of Amadeus (MC:AMA) shares in January and the issue of a 600 million euro hybrid bond in April.
Rival IAG (L:ICAG), the owner of British Airways and Iberia, also reports results on Thursday.