Air France-KLM Group reported net income of ?913 million ($1.17 billion) for the financial year ended March 31, a 29.3% increase over the ?706 million earned in 2004-05.Last year's results were restated to account for pension fund surpluses at KLM. "The year 2005-06 was marked by two features: Strong world economic growth leading to extremely dynamic levels of activity in our sector, and a significant rise in oil prices. In this environment, we have confirmed the success of the Air France-KLM merger," Chairman and CEO Jean-Cyril Spinetta noted.

Full-year operating revenues rose 10.2% to ?21.45 billion whereas costs were up 8.4% to ?20.51 billion. Consequently, operating profits soared 69.3% to ?936 million from ?553 million in the prior year. Operating margin improved "significantly" from 2.8% to 4.4%. "The synergies generated by the merger, combined with our ongoing cost-control measures, have not only enabled us to attenuate the impact of the rise in fuel prices, but also to improve our margins significantly," Spinetta said. Fuel costs reached ?3.59 billion, up 32% from the prior FY.

Passenger traffic grew 8.6% on a capacity increase of 6.2%, leading to a 1.7-point lift in load factor to 80.6%. This was 5 points above the AEA average, "confirming Air France-KLM's strengthening position in these markets," according to the company. Passenger revenues increased 0.2% to ?16.94 billion with yield rising 1.5% to 8.40 euro cents.

Spinetta's outlook was cautious as he said, "The current year has begun with a further sharp rise in oil prices. Nevertheless, our aim is to generate operating income of at least the same level as last year." AF-KLM expects to boost capacity by some 5% this year.

Net income for the fourth quarter was ?7 million, down 30.3% on the year-ago period. Activity levels remained "robust at all the group's businesses," lifting revenues 12.7% to ?5.19 billion. Operating charges rose 12.1% to ?5.2 billion, mainly owing to fuel costs. Operating result was "at breakeven" as the loss narrowed to ?4 million from ?30 million in the year-ago quarter.