Shares in Ryanair surged by 14 per cent to €7.55 yesterday after the company released its strongest set of first-half results to date.

The low-fares airline reported a pre-tax profit of €168.7 million for the six months to the end of September, up 65 per cent on the same period last year. Profits after tax rose by 71 per cent to €151 million, exceeding profits for the whole of last year.

The performance, which surpassed all analysts' expectations, came on the back of a 37 per cent rise in passenger numbers across Ryanair's 89-strong route network, now spaning 14 countries.

The company has raised its full-year guidance from €200 million to €230 million in after-tax profits. Mr John Mattimoe of Merrion Stockbrokers was among several analysts to echo the move, increasing his guidance to €235 million.

While the average customer fare at Ryanair declined by 2 per cent over the period, the company's costs fell at a faster rate, thus raising margins by six percentage points to 32 per cent.

Operating costs fell by 11 per cent year on year, as Ryanair took advantage of larger aircraft, which carry 45 per cent more passengers, while maintaining a 25-minute turnaround. The firm also benefited from its strategy of hedging fuel costs, spending 10 per cent less on fuel than in the first half of last year. Ryanair has 80 per cent of its fuel requirement until the end of September next year hedged at a lower price than has been paid so far this year.

Ryanair expects to carry 15 million passengers in the current fiscal year, a rise of 35 per cent on last year, according to the company's commercial director, Mr Michael Cawley. He added that he expected a similar result over the coming years, but said that performance in the final quarters of this year was unlikely to be as strong as the first-half numbers.

Ryanair gave away 850,000 free seats as part of a promotional offer in September. Similar offers are to be made early next year.

Mr Cawley said discussions had been opened with Boeing with regard to the delivery of additional aircraft. He said he was "very optimistic" about reaching a good deal with the aircraft manufacturer, which is already due to deliver 103 new aircraft to the airline, and was recently rejected by EasyJet in favour of Airbus.

Looking forward, Mr Cawley said Ryanair was intent on continued expansion of its route network and that a number of European locations were under consideration for a new base. Ryanair unveiled its eighth European base at Bergamo, near the Italian city of Milan, last week.

Since September, Ryanair has been publishing statistics on passenger service, a practice which Mr Cawley believes every airline should follow. The company achieved an 86 per cent punctuality rate in October.

"At the moment, we're operating in a vacuum," he said, adding that mainstream European airlines were likely to be subjected to further consolidation.