A pilots strike at Air France entered its second day on Tuesday, with the two sides appearing no closer to resolving a dispute over cost cuts that has forced the airline to cancel 60 percent of flights.
The pilots are carrying out a week-long strike over Air France's plans to expand the low-cost operations of its Transavia brand by setting up foreign bases as it seeks to fight back against fierce competition from budget carriers.
The airline said it expected to operate "at least 40 percent of its flights" on Wednesday, based on three-fifths of pilots walking out, as management prepared to hold further talks with unions later on Tuesday.
"We're continuing to negotiate, we have made proposals, we have heard the concerns of pilots who imagined that Transavia France could suddenly replace all of Air France across France," Air France Chief Executive Frederic Gagey told Europe 1 radio.
Shares in Franco-Dutch parent group Air France-KLM were down 3.7 percent by 1205 GMT on Tuesday, marking a two-day drop of around 7 percent.
New competition from low-cost rivals as well as fast-growing long-haul carriers in the Gulf have prompted European carriers to speed up restructuring measures and tweak their business models.
Alitalia is set to undergo restructuring and loss-making Finnair said last month it is taking rapid steps to cut its costs. But Air France-KLM and Germany's Lufthansa , which have both issued profit warnings in recent months, have a history of stormy relations with their powerful unions.