Ryanair raises full-year forecast - FT.com Ryanair shares climbed on Monday after the budget carrier boosted its full-year profit guidance on the back of higher fares, lower fuel costs and a jump in passenger numbers over the summer. The low-cost airline, which is awaiting the outcome of a European Commission regulatory probe into its bid for Irish flag carrier Aer Lingus , on Monday reported a 7 per cent year-on-year increase in first-half passenger numbers to 48m. The increase in short-haul passengers in the six months to September 30 pushed up revenues from €2.7bn to €3.1bn (£2.5bn), while pre-tax profit rose 9 per cent to €679m. The Dublin-based carrier attributed the increase to "a combination of strong summer bookings, particularly post the Olympics, a 6 per cent rise in average fares, and lower than forecast fuel bill." The stronger figures encouraged the Irish airline to increase its underlying profit guidance for the 12 months to the end of March - which includes the usually loss-making winter period - by about 20 per cent to €490m-€520m. The news pushed up Ryanair shares 9 per cent to €4.96 in early trading. "We expect market conditions in Europe to remain tough as recession, austerity, high fuel costs and taxes damp air travel demand," said Michael O'Leary, chief executive. Further airline failures and consolidations are inevitable given the fragmentation among European airlines and the existence of so many high-cost, high-fare airlines with poor punctuality records. Mr O'Leary's statement came as Ryanair reiterated its hope that its submission of a "revolutionary" package of remedies would assuage European Commission competition concerns about its bid for Aer Lingus. Ryanair has warned that if its third bid for the Irish flag carrier were blocked by Brussels it would sell its stake and Aer Lingus would inevitably be broken up. In 2007, the Commission prohibited Ryanair's first takeover bid for Aer Lingus, saying that the combined entity would have harmed consumers by creating a monopoly or dominant position on 35 routes to and from Ireland. Ryanair's first-half diluted earnings per share rose from 36.56 cents to 41.2 cents, and a special dividend of 34 cents a share - approved at its general meeting in September - will be paid at the end of this month. Ancillary revenues, such as commissions on hotel and car rentals, rose 20 per cent to €584m. "Ryanair has an exceptionally strong balance sheet - with gross cash in excess of €3.9bn and net cash of €250m," said Gert Zonneveld, analyst at Panmure Gordon. Average fares should benefit from the deceleration and eventual standstill in its network capacity growth, culling underperforming capacity in favour of high return/lower cost routes and possibly higher competitor fares.