Air France-KLM posted full-year operating profit up 32.5% to 1.24 billion euros ($1.67 billion), as sales rose 7.6% to 23.07 billion euros, with the impact of higher passenger activity offset by an increased fuel bill.
The French-Dutch carrier also announced a dividend hike of 60% to 0.48 euro per share.
Looking ahead, it said it is targeting a further rise in operating profit and a 7% return on capital employed over the 2007-8 financial year.
Net profit was 891 million euros, down 2.4%.
Fuel expenses were a key factor in the results, rising 18.7% to 4.26 billion euros. This was mostly due to higher costs, with only a small part due to increased purchases. Fuel expenses in the new fiscal year are seen rising to 4.6 billion euros.
Full-year passenger activity rose 5.4%, with a 4.4% increase in capacity. The load factor was 81.4%, up 0.6 point from the previous year.
A further capacity rise of 5% is planned in the new fiscal year.
The company said it sees synergies from merging Air France and KLM reaching 1 billion euros by 2010, in line with a projection it made last October.