Ryanair's share price rose by 12.5 per cent in Dublin yesterday after it announced better-than-expected first quarter results and said its net profit this year would rise by 10 per cent. This is double the growth rate previously guided to investors.

The shares rose by 59 cents to close at €5.30, leading a revival in the Irish stock market, which closed the day up 307.56 points, or more than 3.7 per cent, at 8,563.39. The rally increased the airline's market value by €900 million to €8.1 billion.

The budget airline announced after-tax profits of €138.9 million for the three months to the end of June, up 20 per cent on the same period in 2006.

Passenger numbers rose by 18 per cent to 12.6 million, while revenues were up 22 per cent to €693 million. Its ancillary revenues - which include car hire, hotel bookings, travel insurance, onboard sales and excess baggage revenues - rose by 53 per cent to €117.1 million.

Ancillaries now account for 17 per cent of total revenues and Ryanair said it expected this figure to rise to 20 per cent over the next three years.

The budget airline said its unit costs for the remainder of the year will grow by 5 per cent, lower than the 6-7 per cent previously guided.

Ryanair has hedged 90 per cent of its fuel costs since June 1st and said its fuel bill would be 10 per cent lower than last year.

The airline said passenger numbers would grow by 18 per cent to 50 million this winter (November to March), below the 24 per cent growth rate previously anticipated. It said yields (revenues per passenger) would also be affected in the second half of its financial year, which ends in March.

Yields will decline by 5-10 per cent compared with last year.

The company has taken the unusual step of mothballing seven out of 40 aircraft at Stansted for the winter period. Ryanair said it would be "more profitable" to ground the planes rather than fly them due to increased charges at the British airport.

Neil Sorohan, Ryanair's finance director, rejected the suggestion from some quarters that the airline was deliberately playing down expectations for the rest of this year. "We know what the booking patterns are for the next two months but we have limited visibility into the winter," he said.

Ryanair said the average number of seats filled on each aircraft in the first quarter declined by two points to 82 per cent.

Mr Sorohan said the airline would shortly file its appeal to the European Commission's decision to block its attempted takeover of Aer Lingus. He said the appeal process could take 18 months to two years to complete.