Air France-KLM reported a better-than-expected operating profits of €1.05 billion last year.
The result represented a rise of €269 million over 2015 and was helped by low fuel prices and a 4% rise in carryings to 93.4 million passengers.
The airline said it had made a “resilient” start to 2017 but promised further cost-cutting.
Chairman Jean-Marc Janaillac said: “With a contrasting environment, Air France-KLM delivered an improvement in its 2016 results, reflecting the initiatives and efforts of its employees and the loyalty of customers.
“While the fall in the oil price significantly reduced the Group’s costs, the geopolitical context, competition and industry overcapacity all resulted in lower unit revenues.
“With Trust Together, our strategic project, we are resolutely committed to regaining the offensive, reinforcing our ability to innovate and improving our competitiveness.
“In an economic and geopolitical context that remains very uncertain, and faced with aggressive competition, the status quo is not an option.”
The airline plans to outline details of the Trust Together initiative at an investor day on May 12.