The no-frills airline has attributed its growth to a large increase in passenger numbers and disciplined cost management, Siobhán Creaton, Finance Correspondent

Ryanair has posted an exceptionally strong performance in the first quarter of its financial year, achieving a 68 per cent rise in pre-tax profits to €39 million.

The no-frills airline attributed its growth in profitability to a large increase in passenger numbers and disciplined cost management, but warned that investors should expect a slower rate of growth for the rest of the year.

Ryanair chief executive Mr Michael O'Leary explained that, while the airline enjoyed strong growth between April and June 2002, its performance in the same quarter last year was depressed by the launch costs of many new routes. In the first quarter of 2001, Ryanair reported pre-tax profits of €23.2 million.

"We will not repeat 68 per cent growth in net profits in the second quarter and, going forward, we expect to see profit growth running in line with previous guidance for the remainder of the year," he said yesterday.

Ryanair shares closed 10 cents higher at €6.20 in Dublin yesterday following the results. Analysts were upbeat about the airline's prospects over the coming months with most preparing to upgrade their profit forecasts for the full financial year to €200 million from €185 million.

During the three months, the number of passengers travelling with Ryanair rose by 38 per cent to 3.5 million as the airline reduced many of its airfares. It reported high load factors on all of the 10 routes from its German base at Frankfurt Hahn and eight new routes out of Stansted in London. On average its load factors rose from 77 per cent to 83 per cent.

Total revenues rose by 29 per cent to €194.3 million, while total operating costs increased by 22 per cent to €148.9 million. Earnings per share rose by 61 per cent at €5.16. Its marketing and distribution costs declined by 11 per cent over the first quarter.

Europe's other low-fares carrier, EasyJet, also recently reported a strong performance, at a time when many of the world's major airlines have been struggling to cope with the fall-out from the terrorist attacks on the US on September 11th. British Airways and KLM both recently gave uncertain outlooks following their first-quarter results but have said they are starting to fight back against the discount competition on their short-haul networks by cutting costs to offer lower fares and shifting towards online booking.

Aer Lingus reported an operating loss of €50.4 million last year after exceptional charges associated with 2,000 redundancies.

Mr O'Leary said the tumultuous events in the airline industry over the past 12 months had created huge growth opportunities for Ryanair.

He said the airline expected to open at least one new base in Europe each year for the next three or four years.

Speaking to The Irish Times yesterday, Ryanair's commercial director, Mr Michael Cawley, said business during this quarter was performing strongly, with passenger numbers growing in July and August. He said the airline was considering 40 to 50 new routes and up to nine new bases with growth potential in Germany, France, Scandinavia, Italy and Britain.

To exploit these opportunities, Ryanair has announced that it has agreed with Boeing to convert three of its rolling 50 option aircraft into firm deliveries during spring 2003. This will bring the number of new Ryanair aircraft by summer 2003 to 13.

With these deliveries, it expects to be able to expand at a slightly faster rate of 30 per cent for the next two years, with total passenger numbers forecast to swell to just under 20 million in 2003 and 2004.

Mr O'Leary also welcomed the Government decision to proceed with the construction of a temporary low-cost terminal at Dublin Airport, while inviting proposals for a second competing terminal.

"This initiative will finally introduce competition in the Irish airport sector, and this will result in lower prices and better facilities for Irish consumers," he said.

The airline chief executive added that if the Minister for Transport, Mr Brennan, introduced such competition then Ryanair would envisage introducing a range of new low-fare routes between the Republic and continental Europe.