Air France-KLM, Europe’s largest airline, has reported a record loss of €1.56 billion in what its chief executive described as the airline’s “annus horribilis”.

After a year marked by the loss of 228 lives in a crash off the coast of Brazil, the Franco-Dutch carrier said that its revenues had fallen 15 percent to €21 billion in the year ending March 31 as passengers shifted to low-cost carriers and downgraded from business to economy class.

Pierre-Henri Gourgeon, its chief executive, said: “2009-10 will go on record as our ‘annus horribilis.’ ”

The operating loss of €1.28 billion is ten times larger than the last financial year, which was the first time the airline had recorded a loss since 1996.

The final quarter was particularly stark, with a net loss of €691 million, compared with €479 million year-on-year.

Gourgeon painted a more bullish picture for the current financial year, despite the closure of European airspace because of volcanic ash costing €260 million in lost revenue. He expected a break-even operating profit after excluding the cost of fuel hedges from its balance sheet.

He also said that the airline’s cost cutting programme had begun to reap rewards and that recent weeks had brought the first signs of recovery. It hopes to make savings of €800 million over two years under a plan that will include 3,600 job losses.

Executives are also hoping to boost productivity of its pilots, who fly less than 600 hours a year, compared with 900 hours for their counterparts at Ryanair. It is also undertaking a cheap flight promotion this summer in an attempt to win back market share.

The group’s previous worst year was 1993, when it reported losses of €1.2 billion, triggering a government-led rescue that propelled Air France towards privatisation in 2004.