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Last Updated: Monday, 6 February 2006, 08:21 GMT
Fuel costs knock Ryanair profits
Ryanair plane on runway
Ryanair's fuel costs have been rising steeply
Low-cost airline Ryanair has seen its profits hit by rising fuel costs in the third quarter of the financial year.

The Dublin-based carrier said adjusted profits to 31 December, after tax, rose to 36.8m euros (25m; $44m), from 34.8m euros in the same period in 2004.

But the firm said "very high fuel prices" were a "drag on profitability".

The airline, which has said that from 16 March it will charge 2.50 for each luggage item put into aircraft holds, also said passenger numbers grew 26%.

'Aggressive focus'

The company said its costs would have been reduced overall, but rose 3% in the quarter primarily due to fuel costs rising 59%.

It said it had hedged the costs of its fuel to $49 a barrel until the end of March, but was unhedged after that.

However it said it was monitoring the situation and hoped to hedge its fuel requirements for 2007.

"We continue to focus aggressively on costs and anticipate that the cost reductions will continue to partially offset the significantly higher oil prices," Ryanair said in a statement.

'Cautious' outlook

In November, the company said it expected full-year profits before one-offs to come in at around 200m euros (135.7m; $239.2m).

"We remain cautious in our outlook for the remainder of the fourth quarter," Ryanair chief executive Michael O'Leary said in a statement.

Ryanair has 303 routes after it introduced 34 new services in the third quarter and opened fresh headquarters at Luton, Liverpool and Pisa.

And its Dublin base will be expanded in April with five new planes and another 18 routes.

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