Air France-KLM, Europe's largest airline, on Thursday raised its full-year earnings forecast on a sharp increase in first-quarter profits driven by a rebound in cargo traffic.

Strong growth in passenger revenue also helped the carrier outpace a 25-percent surge in fuel costs.

The cargo division posted operating income that more than doubled to $35.8 million from $14 million a year ago on revenue up 10.5 percent at $933 million on higher traffic and favorable currency movements.

The cargo unit, one of Europe's biggest after Lufthansa Cargo, grew traffic 3.7 percent in the quarter on a 2.6-percent increase in capacity that lifted the load factor, or portion of cargo space filled, by 0.7 points to 66.2 percent.

Operating profit in the three months to the end of June gained nearly 85 percent to 411 million euros ($526 million) from $285 million in the year-earlier period, while revenue climbed 12 percent to $7.4 billion from $6.65 billion a year ago.

Net income more than doubled to $312 million from $143 million.

The company said it expects a "significant" increase in full-year operating income, before tax, interest payment and aircraft sales. In May it said it would "at least" equal the $1.2-billion profit in the financial year ended March 31.

By Bruce Barnard
The JOURNAL of COMMERCE ONLINE