Paris (AFP) - Air France-KLM said Thursday it will launch an assault on the competition with the creation of a long and medium-haul subsidiary, aimed at taking business from Gulf-based rivals.

"The Air France-KLM Group's ambition is to regain the offensive to return to a leadership position in the global air transport industry," it said in a statement.

The new airline will operate in "ultra-competitive" markets which have so far been loss-making for the group, or where routes have been closed down.

"This new company will constitute the Group's response to the Gulf State airlines which are developing at low production costs on key markets where Air France-KLM is pursuing its growth ambition," it said.

The airline, which "will not be low cost", is to launch medium-haul flights towards the end of next year, and long-haul services in the summer fo 2018, it said.

By 2020, it is to feature 10 long-haul aircraft, with around a third of operations focused on newly-created routes.

The new airline is part of a new strategic initiative called Trust Together, which aims to bring group sales to 28 billion euros ($31 billion) by 2020, compared with 26 billion euros in 2015.

Also on Thursday, Air France-KLM reported a net profit of 544 million euros for the three months to September, compared to 481 million a year earlier, and better than analysts had expected.

The company's shares were sharply higher in late morning trading on the Paris stock exchange, rising 3.5 percent to 5.62 euros.