AF Air FranceKLM

PARIS—Franco-Dutch airline group Air France-KLM said Wednesday that lower fuel costs helped earnings in the first quarter but it remained in the red.

The company said its net loss narrowed to €155 million ($178 million) in the three months to the end of March from a loss of €559 million in the same period in 2015, on sales that rose 0.4% to €5.61 billion. Analysts polled by FactSet expected a net loss of €314 million on sales of €5.53 billion.

The company's earnings before interest, taxes, depreciation and amortization, a measure of operating profitability, swung to a €266 million profit from a €26 million loss in the same period last year.

The company achieved its improved performance during the quarter despite a difficult environment marked by the Brussels terror attacks and adverse currency fluctuations, said Chief Executive Alexandre de Juniac. Currency swings cost the company €79 million during the quarter.

"All the staff can legitimately congratulate themselves for their efforts producing results," Mr. de Juniac said.

Total operating costs were 4.9% lower year-over-year, the company said. Excluding the effect of cheaper fuel, costs actually rose 2%.

Even though the company managed to book its first annual profit in eight years in 2015, it remains in a difficult position and needs to reduce costs further to keep up with rivals. Budget airlines such as Ryanair Holdings PLC and easyJet PLC in Europe, and long-haul competition from rapidly expanding Middle East carriers are much more profitable than Air France-KLM.

Write to Inti Landauro at inti.landauro@wsj.com

(END) Dow Jones Newswires

May 04, 2016 03:45 ET (07:45 GMT)

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