Air France-KLM said it had reached an agreement with French unions to renegotiate working conditions as it seeks to cut costs and stabilize its EUR€6.5 billion (USD$8.6 billion) debt.
The so-called methodology and framework agreement was signed with most of the unions representing ground staff, cabin crew and pilots, Europe's biggest airline by revenue said in a statement on Tuesday.
The deal is "a first step in Air France's transformation process" and paves the way for a new set of labour agreements to be concluded by June, the company said.
Air France-KLM swung to a EUR€353 million operating loss last year, squeezed between soaring fuel costs and weaker pricing as Europe's economic slowdown hurt demand.
The company is seeking EUR€2 billion in annual savings aimed at reducing net debt to EUR€4.5 billion by the end of 2014.