Air France-KLM has today posted a sharper-than-expected increase in third-quarter profits.

But the airline warned unions that the gains from improved demand over the summer would not remove the "overwhelming need" for cost cuts to keep pace with rivals. 

With the year-earlier quarter hit by a pilot strike, the Franco-Dutch airline group turned in operating profit that almost quadrupled to €898m on revenues that grew 10.8% to €7.415 billion. 

The figures compared with average analyst forecasts of €694m and €7.236 billion respectively. 

But after failing to strike a productivity deal in recent stormy negotiations with pilots, Air France-KLM lowered its forecast for unit cost savings in 2015 to 0.5-0.7% from 1-1.3% and urged unions to resume talks.

It continued to predict a €1 billion drop in debt in 2015 to €4.4 billion.

After a healthy peak summer season, the company's finance director Pierre-Francois Riolacci said that by the end of September the group had begun to hold onto some of the benefit from low oil prices that had previously been swallowed by currencies and revenue pressures. 

"But this is fragile; it's something that can't last, not least because we don't have enough visibility for the winter season when we see quite significant increases in (industry) capacity on European long-haul, and even more so intra-Europe," he added. 

Lufthansa, which also reported results today, and British Airways parent IAG have also improved their performance, leaving a gap in competitivity that Air France-KLM's earnings alone would not be able to fill, he said.