Airline group Air France-KLM, struggling for profit, said Monday it will develop low-cost short- and medium-haul services through its no-frills Transavia unit and seek more savings.
The company said it would maintain its current short- and medium haul flights but on condition that further cost savings be found.
"Next June, we will be able to present a plan for the company. The target of 20 percent in cost savings is the minimum -- to achieve less would be to compromise the recovery and future of the company," chief executive Alexandre de Juniac said in a statement.
Air France announced in January a series of urgent measures to save one billion euros ($1.32 billion) over three years and Monday's statement pointed to deeper restructuring and savings of another billion euros.
Air France recently set up operating hubs in the southern cities of Marseille, Nice and Toulouse to cut costs by 15 percent and improve productivity.
Last year, the Air France-KLM group lost 700 million euros on its short- and medium-haul flights due to intense competition from low-cost carriers.
The airline said it hopes to break even on the network by 2014 but warned that "additional savings will be necessary."
Air France-KLM last month reported results for the calendar year for the first time since it was structured in its current form in 2004, posting a net loss of 809 million euros compared with net profit of 289 million euros on an equivalent basis in 2010.