Air France expects to make profit when it reports its annual results at the end of March, boosted by a government payments of up to 80m euros for lost business and costs arising from 11 September.

The French flag carrier made the forecast as the company reported a net loss for the final three months of 2001 of 131m euros (£79.8m), compared to a net profit of 32m euros a year earlier.

Like many other international carriers, Air France was already suffering from the global economic downturn before the 11 September attacks on the US triggered a slump in passenger numbers.

Air France said the latest results exclude the indemnity payments, the first 27.8m euro of which was received in January.

After falling 34% last year, Air France shares have regained 10% since the start of 2002 as the industry begins to recover from the 11 September attacks.