State-owned CSA Czech Airlines will post a CSK300 million to CSK400 million koruna (USD$12.2 million-USD$16.2 million) loss this year, but cutting costs should bring a return to profit in 2006, its head said on Thursday.

CSA President Jaroslav Tvrdik said fuel remained pricey despite a fall in oil prices, and the company would respond by cutting around CSK300 million (USD$12.2 million) in costs next year through more centralized and Internet-based purchasing.

"Air transport remains in deep trouble but this year's loss should be the last one," Tvrdik told reporters. "We believe in a return to profit next year."

The Czech firm, a possible candidate for an initial public offering some time after a general election scheduled for mid-2006, has reported a 22 percent year-on-year increase in the number of passengers for the first three quarters.

Tvrdik declined to give a passenger traffic forecast for the next year but said the company may change its flight structure.

"We are considering whether to change our strategy and the philosophy of our (flight) network," he said, adding that the airline wanted to concentrate more on Czechs travelling abroad from now on rather than on foreign customers.

Fifty percent of CSA's passengers are transfer travellers. The carrier competes with other central European airlines over who will serve as a proxy for flights further east.

CSA, a member of the Sky Team alliance along with Air France-KLM and Delta Air Lines, posted a net profit of 271 million crowns last year before high crude oil prices and a subsequent jump in fuel prices dragged it into the red this year.