The Franco-Dutch airline group reported lower operating profit and slipped further into the red with a net loss of 79 million euros in the quarter, but maintained its objectives for the year on Friday, including a reduction in debt.
Chief Executive Alexandre de Juniac said the 300 million euros in new savings would slash about a quarter from the group's general administrative expenses of over 1.1 billion.
He urged Air France pilots to reach a new productivity agreement by the end of September but warned that without a deal, the airline would have to take "severe measures" to cut back routes in its long-haul network as early as October.
It has already reached deals with KLM pilots and staff involved in provincial bases in France, he told reporters.
Air France-KLM said it would increase capacity by just 0.6 percent over the year as a whole, compared with a rise of 1.1 percent it had predicted in February.
The company posted second-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of 569 million euros. Revenue grew 3 percent to 6.642 billion, but fell 4.5 percent on a comparable basis.
Analysts were on average expecting second-quarter EBITDA of 575.5 million euros and net profit of 2.97 million on sales of 6.513 billion, according to consensus data from Thomson Reuters I/B/E/S.
In the second quarter, unit revenue per passenger-kilometre fell 4.8 percent on a like-for-like basis.
For the first half, Air France-KLM said all the gains from
lower fuel prices were offset by pressure on unit revenue and currency swings, forcing it to accelerate cost savings.
The first-half operating loss widened to 232 million euros as the stronger dollar pushed up fuel and maintenance costs. Air France-KLM pays 42 percent of its costs in dollars, but receives only 25 percent of its revenue in the U.S. currency.
The group reiterated plans to improve unit costs by 1-1.3 percent or 250-300 million euros over the year as a whole, based on measures already announced. Unit costs per available seat-kilometre fell 0.5 percent in the second quarter.
It still plans to reduce its net debt to 4.4 billion euros by end-2015. At mid-year, Air France-KLM's debt stood at 4.55 billion euros, down from 5.41 billion a year earlier.
(Reporting by Cyril Altmeyer and Tim Hepher; Editing by James Regan)