Plummeting oil prices helped Air France-KLM return to profit in 2015 for the first time on four years.

The airline’s annual fuel bill fell 6.7% and in the fourth quarter of spending on fuel was down 20%, however hedging contracts limited the annual saving to €6.18 billion.

The fourth quarter of 2015 was also hit by the terror attacks in Paris which had a €120 million impact as tourists stopped travelling to the capital, although revenues rose 2.2%.

Yesterday, the airline reported better-than-expected operating profit of €816 million, a significant turnaround on the €129m loss it made in 2014.

As well as fuel prices, the airline said the improvement was due to increased passenger numbers, however, it warned lower ticket prices were offsetting cheaper fuel benefits.

In a statement the carrier said: “The global context in 2016 remains highly uncertain regarding fuel prices, the continuation of the overcapacity situation on several markets, and the geopolitical and economic context in which we operate.”

The BBC reported the airline is cutting labour costs and restructuring to compete with fast-growing Gulf airlines and European low-cost carriers.

The airline lowered net debt by €1.1 billion to €4.3 billion a figure it will reduce further this year.

After last year’s protests over new contracts for staff under its ‘Perform 2020’ programme, the airline has said it will continue to make strides to improve its competitiveness.

Air France is due to make 1,600 people voluntarily redundant by 2017, a marked reduction from original plans for 2,900 job losses.

Air France-KLM pays 30% of overall revenue in wages, while Lufthansa’s wage bill accounts for 25% of revenues and Ryanair’s just 12%.