Budget airline Ryanair yesterday warned shareholders that soaring fuel costs were cutting into its profits - but it also vowed never to introduce a surcharge.
The low cost Irish carrier said its fuel bill rose 59 per cent in the third quarter to 1 14.9 million euros (£78.5 million) as the cost of oil and gas increased.
But with passenger numbers, revenues and profits up in the three months to December 31, the company, w hich operates flights between Birmingham and Dublin, pledged not to raise fares to cover the bill.
"We will never have a fuel surcharge," insisted Ryanair deputy chief executive Michael Cawley. "Absolutely not."
He added that Ryanair was on target to meet its full-year profits target of 295 million euros (£201.5 million) and double annual passenger numbers to 70 million in four years.
Morgan Stanley analyst Menno Sanderse said: "The numbers are in line with expectations but the market may be disappointed by the lack of an upgrade for full-year forecasts."
Ryanair said net profits after exceptional items lifted from 34.8 million euros (£23.8 million) to 36.8 million euros (£25.1 million) in the third quarter.
It came as passenger numbers jumped 26 per cent to 8.6 million while turnover rose 27 per cent to 370.7 million euros (£253.2 million).
But with higher fuel costs slashing margins by two per cent and a change in accounting relating to the purchase of rival airline Buzz, pretax profits fell from 50.6 million euros (£34.6 million) to 40.6 million euros (£27.7 million).
Mr Cawley said: "We are very pleased with the results. In the context of fuel prices going up I think it is a very credible performance."
Chief executive Michael O'Leary said the outlook for the rest of the year was "cautious", but added: "Ryanair's lowest fare model yet again delivered increased profits and passenger growth for the quarter despite the intense competition and drag on profitability of very high fuel prices."
Ryanair said it now carried more passengers each month than British Airways and has 303 routes after launching 34 new services in the third quarter and opening new bases at Luton, Liverpool and Pisa.
The airline's Dublin base is set to be expanded in April with five new aircraft and a further 18 routes.
But the planned opening of a base at Nottingham East Midlands has been delayed from March this year to April due to late aircraft deliveries following a strike at aircraft builder Boeing in September.
Ryanair said its focus on reducing costs was "relentless" as it confirmed its plans to lower fares but charge passengers for checking in baggage from March 16.
The average cost of ticket will be cut by £2.50 but passengers checking in luggage will have to pay £2.50 per item.
However, passengers carrying just hand luggage will pay no fee and will be able to check in online and bypass queues.
Ryanair hopes the changes will encourage passengers to travel with hand luggage only and save the company up to 30 million (£20.5 million) a year.
"These look to be solid results in a tough environment," said John Sheehan, analyst at NCB stockbrokers. "On the outlook, they are still unhedged on fuel after March though and they're holding guidance steady."