Air France-KLM's 2.4% decline in consolidated net earnings to EUR891 million (US$1.2 billion) in the fiscal year ended March 31, which compares to a EUR913 million prior-year profit boosted by the sale of its Amadeus stake, will not slow the airline, which announced an aircraft commitment worth approximately US$7 billion on May 24.

The orders, to be signed at the Paris Air Show, comprise the firming of two A380 options, which Chairman and CEO Jean-Cyril Spinetta were "part of an agreement with Airbus relating to compensation for [A380] delivery delays," plus 30 A320 family aircraft and 18 777-300s.

The earnings drop belies the company's growth. Excluding the EUR419 million net capital gain on the Amadeus sale, earnings rose 80% year-over-year. Group revenue climbed 7.6% to EUR23.07 billion and operating costs rose 6.4% to EUR21.83 billion. Operating profit jumped 32.5% to EUR1.24 billion from EUR936 million a year earlier.

"This past year has demonstrated the benefits of our profitable growth strategy," Spinetta said. "We have taken advantage of global growth to develop our business in all major markets and increase our profitability through cost control while continuing to invest in our future."

He added that the first phase of the merger resulted in "significant value creation for both the group and its shareholders" and that the current phase will see a deeper integration of the group's strategic functions. "This will enable us to further enhance our profitability, with a target return on capital employed of 8.5% by 2009-10." ROCE for the reporting FY was 6.5%, up 1.3 points, and is expected to reach 7% in the current financial year.

Full-year traffic rose 5.4% against a 4.4% increase in capacity, lifting load factor 0.6 point to 81.4%. The company carried 73.5 million passengers, up 5%, and generated passenger revenue of EUR18.37 billion, up 8.4%. Operating income soared 55.5% to EUR1.07 billion. Yield increased 3.4% to EUR0.087, RASK rose 4.4% to EUR0.071 and unit cost grew just 2.6% to EUR0.066.

Fourth-quarter net profit surged to EUR43 million from EUR7 million in the year-ago period. Revenues lifted 3.7% to EUR5.39 billion and operating costs were up 3.4%. Operating result swung to a EUR49 million profit from the year-ago quarter's EUR4 million loss.

The group is targeting a capacity increase of about 5% this year. It expects a "slight" rise in unit revenue and a further improvement in operating income. The new cost-saving program "Challenge 10" should generate savings of EUR560 million this year and EUR1.4 billion over a three-year period.