Air France-KLM has announced that profits have increased strongly for the first half and has forecast higher earnings for the full year. It says that continuing strong demand for air travel, in particular on long-haul routes, lend support to its forecast.

The airline also said that it was still mulling possible takeover moves for both Alitalia, the loss-making Italian flag carrier, and Spain''s Iberia, which is also being targeted by two rival consortia, including one led by TPG and British Airways.

"Any consolidation in Europe must improve the profitability of the new group," said Jean-Cyril Spinetta, Air France-KLM, chairman and chief executive. "If this is not the case of course we would abandon any idea of consolidation."

Air France led the consolidation of the aviation industry in Europe with its acquisition of KLM, the Dutch national airline, in 2004, which was the first takeover of a European flag carrier.

In an innovative move, it is also deepening its ties with Delta Air Lines of the US through the launch of a transatlantic profit and revenue sharing joint venture. Both Delta and Air France-KLM are partners in the SkyTeam global airline alliance.

Operating profits for the first half, to the end of September, rose by 16.4 per cent from €979m to €1.14bn, supported by a strong second quarter from July to September, when operating profits rose by 27.6 per cent to €725m.

The group, the world''s largest airline measured by turnover, said "robust global growth continues to underpin demand, especially on long-haul."

Air France-KLM pre-tax profits in the first six months jumped by 83.4 per cent from €830m to €1.52bn, helped by a gain of €284m from the refinancing of its stake in Amadeus, the global travel distribution system.

Turnover in the first half rose by 4.2 per cent to €12.4bn.