(Adds detail from media report, share price)
PARIS, Feb 7 (Reuters) - Franco-Dutch airline Air France-KLM is likely to launch a capital increase of at least 1 billion euros ($1.36 billion) towards the end of the year, latribune.fr website reported on Friday.
The carrier declined to comment.
Shares in the airline were down 2.5 percent by 1009 GMT, the biggest fallers on France's broader SBF 120 index.
"Air France is down because of the risk of a capital increase," a trader said.
The stock had risen as much as 3.5 percent earlier on Friday after Air France-KLM said passenger traffic rose 3.6 percent last month, driven by growth on long-haul routes, especially to and from the Americas.
Air France-KLM is cutting thousands of jobs to lower costs as it wrestles with the impact of Europe's economic woes on demand for air travel, soaring fuel costs, and aggressive competition from low-cost carriers and Gulf carriers.
Market conditions are not suitable for a capital hike at the moment and no decision has been taken yet, latribune.fr said, adding that the move could come at the end of the year if the environment changes.
The capital raising would enable the carrier to pay down debt and seize investment opportunities, the financial news website reported. ($1 = 0.7353 euros) (Reporting by Constance de Cambiaire and James Regan; Editing by Andrew Callus)