(Updates with share price reaction and background)
PARIS, Oct 8 (Reuters) - Air France KLM reported higher passenger traffic figures for September, as the carrier looks to benefit from the collapse of the two of its smaller French competitors.
Air France KLM said it carried about 9.3 million passengers in September, up 2.2 percent from last year.
The group has been reporting higher traffic figures for 17 months running, and Air France KLM's shares rose by around 1 percent in early session trading.
The load factor - a measure of how packed an airline's planes are - increased by 0.6 percentage points to 89.2 percent from last year, the company said.
Air France-KLM's CEO Ben Smith said last month that a market consolidation through the bankruptcies of certain carriers would eventually benefit the country's aviation industry and jobs.
The French state has a 14.3 percent stake in Air France KLM, while Delta Airlines and China Eastern Airlines each hold an 8.8 percent stake in the group.
Last month, Air France withdrew a rescue bid for Aigle Azur, which has been formally wound down, and has since rebuffed overtures by XL Airways, another insolvent carrier.
A long line of small European airlines have run into trouble faced with industry overcapacity, cut-throat competition and high fuel prices. Airlines Germania, Flybmi and Iceland's WOW have all failed this year, (Reporting by Benoit Van Overstraeten; Editing by Sudip Kar-Gupta)