PARIS - Air France-KLM is discussing plans to raise more capital with its main shareholders, the French and Dutch governments, CEO Ben Smith said in an interview.

The airline group, which flagged a likely share issue in May with its first package of state-backed loans now totalling 10.4 billion euros ($12.3 billion), will have to "continue to adapt" to a renewed slump in air travel, Smith told daily L'Opinion.

Air France has announced 7,500 job cuts in response to the coronavirus crisis, while KLM expects to reduce its pre-crisis workforce of 33,000 by about 20% by next year.

"The French and Dutch government aid is enough to keep us going for less than 12 months," Smith said.

"We're in discussion with our shareholders about how to reinforce our balance sheet beyond that period."

Hopes for a European travel recovery slumped with late summer traffic, amid a resurgence of COVID-19 infection rates, varied travel restrictions and quarantine regimes condemned by the industry as disproportionate. 

The sector also faces new regulatory pressure and green taxes as the European Union and member states push to reduce greenhouse emissions. Austria announced new levies in June along with a 40-euro minimum fare. 

Proposals being considered for a sharp increase to French airline taxes are "irresponsible and catastrophic" and would lead to thousands more job cuts, Smith said.

French President Emmanuel Macron had pledged to introduce the tax proposals among others drawn up by a citizens' climate panel, although ministers may now be backing away from them. 

Policymakers should instead consider introducing minimum ticket prices, Smith said, in comments likely to infuriate low-cost rivals which would be worst affected.

"The idea that we can fly from Europe to Australia in 24 hours remains extraordinary. On the other hand, is Paris-Dublin for 12 euros reasonable" Smith said, citing Austria's minimum fare.

"It's an interesting debate we should have collectively."

($1 = 0.8480 euros)

(Reporting by Laurence Frost and Sarah White; writing by Benoit Van Overstraeten; editing by Catherine Evans and Jason Neely) ((benoit.vanoverstraeten@thomsonreuters.com; +33149495339;))