Air France-KLM trimmed its operating loss last year as it filled a record proportion of its plane capacity and raised prices on North Atlantic routes.
The loss of EUR€300 million (USD$397 million) in 2012 compared with a EUR€353 million loss a year earlier.
Finance chief Philippe Calavia declined to give a profit forecast for this year, saying the context was "too uncertain", but told a briefing he was sticking to targets to return to profit and cut debt by EUR€2 billion by the end of next year.
Reducing debt "is the main goal of the group," Calavia said. "Everything else is done to contribute to this."
Air France-KLM is renegotiating pay and conditions with its staff, cutting 5,122 jobs and has restructured its network to cope with high fuel costs, a worsening cargo business and tough competition from Gulf and low-cost carriers.
German rival Lufthansa this week swung to a profit of EUR€990 million last year but withheld a dividend for the second time in three years, choosing instead to bolster its fleet and fund future restructuring.
Air France-KLM's net debt of EUR€6.51 billion at the end of 2011 was reduced to EUR€5.97 billion in 2012 due to disposals and lower spending, with a target to cut it further to EUR€4.5 billion by the end of 2014.
Air France-KLM pledged to reduce costs at constant exchange rates and fuel price, and lower net debt again this year, without giving specific targets. Calavia said that ultimately EUR€2 billion or EUR€3 billion of debt was "enough" for the group.
"In 2013, we will maintain strict discipline in terms of capacity management, investments and costs," chief executive Jean-Cyril Spinetta said in a statement.
Air France-KLM will cut investments to EUR€1.2 billion this year from EUR€1.5 billion in 2012, when 3,300 staff left the company mostly through natural turnover, Calavia said.
He added that the group's voluntary departure plan would have a greater impact this year and that new agreements with workers would start to help from April, leading to a reduction of several dozen million euros in wage costs.
Air France-KLM limited the rise in seating capacity on its flight network to 0.6 percent last year, while traffic rose 2.1 percent, leading to a record 83.1 percent of capacity filled.
Unit revenue per available seat rose 5.9 percent overall, rising 10.4 percent on North American routes, Calavia said, adding that long-haul traffic had rebounded, while medium-haul services were struggling and cargo traffic had deteriorated.
The carrier plans to raise passenger capacity this year by 1.5 percent overall, Calavia said, adding that it would continue to cut capacity in cargo, where operating losses have ballooned.
Calavia added that the planned USD$11 billion merger of AMR and US Airways was "good news" as it would remove capacity from Transatlantic routes.
Air France-KLM itself has money for consolidation despite its debt-reduction target, although interesting opportunities were outside Europe, especially in Latin America, Calavia said.