AFP - Air France-KLM, Europe's biggest airline, said Friday it had swung to a heavy loss in the final three months of last year as the economic crisis reduced demand for flights and cargo traffic.

The group said the results "reflected the increasing severity of the economic downturn" and it announced it would cut 1,000-1,200 jobs this year through a hiring freeze and by not replacing retirees.

In the final quarter of 2008 -- the third quarter of Air France-KLM's financial year -- the group said it had made a net loss of 505 million euros (million dollars) and an operating loss of 194 million euros.

A year earlier, it reported net profit of 139 million euros.

The net loss was much wider than an estimated loss of 274 million euros on average forecast by a consensus survey of 10 analysts provided by the company.

Revenues for the quarter were 5.97 billion euros, marginally lower than the 5.98 billion euros of the year before.

Air France-KLM, like other airlines, has had a tough year, facing record high fuel prices in the first half of the year and then a recessionary economic environment in the second.

For its full year results, which end on March 31, the group said it still expected to make an operating profit.

The company's stock closed on Thursday at 7.73 euros a share. The stock is down from 18.09 euros a year ago.

For the job losses, a spokeswoman said this would be achieved without redundancies.

"There aren't redundancies at Air France," she said, adding that staff levels had been reduced by 2,000 in 2008.

The job losses reflected lower capacity on routes where smaller planes are being used or fewer flights are planned, she added.