Ryanair hikes profit forecast on higher fares

The Irish low cost carrier, which flies from Leeds-Bradford Airport, increased its full year profit forecast by nine per cent to 480m euros (£403m) after posting revenue growth of 13 per cent in the three months to December 31.

“The EU recession, higher oil prices, the unfolding failure of the package tour operator model, significant competitor fare increases and capacity cuts, has created enormous growth opportunities for Ryanair,” chief executive Michael O’Leary said in a statement.

It reported a net profit of 15m euros, well ahead of a 16m loss forecast in a poll of 21 analysts compiled by the company, after it grounded 80 of its 270 planes over the winter due to high fuel costs.

Revenue was 844m euros in the quarter, ahead of an average analyst forecast of 819m. Average fares rose 17 per cent in the quarter from a year earlier, making up for a two per cent fall in passenger numbers.

A forecast 350m euro increase in the fuel bill next year “poses a significant cost challenge,” Mr O’Leary said.

The Irish carrier follows low-cost rival EasyJet in posting strong revenue growth as higher-priced rivals are battered by fuel costs and a struggling global economy.

German group Lufthansa and Air France-KLM have cut profit forecasts after being battered by fuel costs and slashed plans to expand in 2012.

Ryanair, which expects passenger numbers to grow to 80m passengers this year from 76m in 2010, carried more international scheduled passengers than any other airline in 2010, according to the International Air Transport Association.