By Patricia Vicente  Rua and Catarina Demony

LISBON (Reuters) -Ailing Portuguese airline TAP posted an annual loss of 1.6 billion euros ($1.74 billion) on Monday, while voicing “cautious optimism” that 2022 would bring better results despite uncertainties caused by the Ukraine war and the pandemic.

The airline, which is 72.5% controlled by the Portuguese state, is under a Brussels-approved rescue plan worth 3.2 billion euros and was forced to reduce its fleet size, cut more than 2,900 jobs and reduce wages.

TAP said its 2021 results were hurt by the closure of its aircraft maintenance business in Brazil and the depreciation of the euro against the dollar.

The company, along with the rest of the industry, was still facing “unprecedented levels of uncertainty” due to various factors, from COVID-19 to Russia’s invasion of Ukraine, Chief Executive Officer Christine Ourmieres-Widener told a news conference.

Rising inflation may create further challenges, mostly due to the cost of materials and fuel, she said.

Chief Financial Officer Goncalo Pires said the airline would need to “continue to perform in line” with its restructuring plan in order to present better results in the future.

“Delivering the plan is about maximising revenue but also controlling costs,” Pires told reporters. “There are many external factors, so we need to find strategies to mitigate those.”

Under the restructuring plan, TAP also had to wind down and close its aircraft maintenance business in Brazil, which represented a non-recurring loss of 1.03 billion euros.

In 2020, the airline posted a 1.2 billion euros loss due to the pandemic. Ourmieres-Widener said TAP was not likely to reach pre-pandemic levels before next year.

The company transported 5.83 million passengers last year, up 25% on 2020, but only 34% of the pre-pandemic level in 2019.

($1 = 0.9170 euros)

(Reporting by Patrícia Vicente Rua and Catarina Demony; Editing by Inti Landauro, Ed Osmond and Mike Harrison)