Ryanair will suffer as a result of the European Commission ruling on illegal subsidies but the decision is not as bad as portrayed by the company, analysts said yesterday.

Shares in the company rose again yesterday, closing above €5 for the first time since it issued a profit warning last week. The stock rose 3.4 per cent higher yesterday to €5.12 in Dublin.

But Irish dealers said the share price was likely to remain rangebound between €4.75 and €5.25 until there was some clarity on yields. This is not expected until the end of the group's key second-quarter, which runs to the end of September.

Airport operators fear the Commission decision to force Ryanair to pay back €4 million of the money received from Charleroi airport may lead to a series of clashes over subsidies.

Mr Philippe Hamon, director general of Airports Council International (ACI) Europe, said: "I think we will see a series of clashes... it will be messy."

He said the EU needed to issue comprehensive guidelines to prevent a long series of complaints, investigations and court cases involving airlines and airports.

Ryanair's chief executive, Mr Michael O'Leary, has said the airline will appeal the Commission decision.

The airline suffered another slight yesterday when the British advertising watchdog ordered it to drop a claim that "only Ryanair has the lowest fares".

The Advertising Standards Authority said the claim was misleading because Ryanair didn't offer lower fares than its competitors on all routes at all times. The complaint had been lodged by rival EasyJet.

Citigroup Smith Barney said the company's earnings should be back on track by the end of this year. "We believe most of the downside is in the share price and do not expect further profit warnings," said Citigroup analysts Mr Andrew Light and Mr Paul Dewberry. "Ryanair's business model, cost advantage and growth opportunities... are likely to remain superior to the rest of the low-fares sector."

Citigroup lowered the company's rating one notch to "high-risk hold", saying the the group's excessive capacity remained a bigger cause of concern than the EU ruling.

ABN Amro, which has been bearish on Ryanair, raised its rating from "sell" to "reduce". "The ruling is not a disaster for Ryanair but should increase its airport and marketing costs."  - (Additional reporting, Reuters)