KLM Royal Dutch Airlines warned today it was unlikely to achieve a full-year operating profit.
The airline industry has been hurt in recent months by the growing prospect of war in Iraq - a scenario that has affected passenger traffic and boosted fuel costs as oil prices hit multi-year highs.
The Dutch air carrier, expected nto report third-quarter results on January 23rd, has also suffered from a weak economy at home and in Germany. It said the operating environment would remain difficult in its fiscal fourth quarter, which ends in March.
"This is an indication that the industry has been suffering in the recent weeks and will continue to have problems for at least the next several months," Mr Nick van den Brul, analyst at BNP Paribas, said.
"We might not see other profit warnings, but we will continue to see weaker operating figures".
Shares in KLM, Europe's fourth-largest air carrier, dropped as much as 9 per cent on the news and at 10.57 a.m. they were down 7.9 per cent at €9.02.
European rivals British Airways and Lufthansa fell by about 2 per cent.