Air France-KLM will slash 40 per cent of its French domestic flights by next year in exchange for receiving seven billion euros ($7.7 billion) in emergency coronavirus funding backed by the French state, the company's chief executive said.

“Capacity will be reduced by 40pc between now and 2021, with some destinations dropped,” Benjamin Smith told shareholders at the airline's annual general meeting in Paris.

Smith said Air France would stop flights between cities where trains could provide a connection in less than two-and-a-half hours, or if the service did not contribute to an increase in traffic at its Paris hub, Charles de Gaulle airport.