Air France-KLM has reported a net loss of €7.1 billion for 2020, and warned that it anticipates “a challenging first quarter 2021”, with Covid-19 lockdowns and travel restrictions still in place.

The group expects to operate at around 40 per cent capacity in the first quarter of this year, but said that it will “progressively ramp up capacity towards summer 2021 and expects recovery in the second and third quarter 2021 thanks to the vaccine deployment”.

Air France-KLM also confirmed that it “continues to work on quasi-equity and equity solutions” to strengthen its balance sheet, and expects progress in the coming weeks.

The FT reports group chief financial officer Frédéric Gagey as stating that the timing of an agreement over fresh support is “more a question of days and weeks than quarters, so we are confident”.

The news comes as Irish carrier Ryanair this week said it would appeal against a ruling by the General Court of the European Union in favour of state aid schemes in France and Sweden.

Ryanair to appeal EU Court ruling on airline state aid

Last year the group’s carrier’s Air France and KLM took on a combined €10.4 billion in state-backed loans, which came with environmental conditions including a reduction in Air France domestic services.

“2020 tested the Air France-KLM Group with the most severe crisis ever experienced by the air transport industry,” said CEO Ben Smith.

“I would like to thank our employees for their dedication and tremendous flexibility during this period, which has allowed us to remain resilient despite an unprecedented drop in traffic.”

“Since the very beginning of the crisis, we set the highest standards of health and safety for our customers and our employees, all while being able to seize Cargo opportunities and continuously adapting our flight schedules in the face of ever-changing travel restrictions.

“Thanks to the French- and Dutch state support and this agile way of working, we were able to drastically reduce our costs, protect our cash, and continue the execution of major transformation plans within our airlines, involving the efforts of all employees.

“In the coming months, we will continue to strengthen the Group’s core, improving its economic and environmental performance, so that Air France-KLM will be in a position to fully leverage all opportunities when the industry starts to recover.

“We begin 2021 looking forward that this year will see an upturn in traffic as soon as vaccination is deployed on a large scale and borders once again reopen. Our customers look forward to being able to travel again and their attachment to Air France, KLM, and Transavia has grown stronger during this crisis.”