Ryanair’s annual profit jumped by two-thirds as low fuel prices drove down costs, with passenger numbers growing on the back of lower fares and a successful campaign to transform the Irish airline’s brutal image of old.

The low-cost carrier more than tripled its target for additional passengers as net profit for the year to the end of March increased 66% to €867m (£613m). The airline said it expected profits to near €1bn after tax next year.

Passenger numbers rose 11% to 90.6 million, outstripping a targeted increase of 4%. Ryanair predicted it would this year become the first European airline to serve more than 100 million passengers in a year.



Lower fuel costs played a big part in the profit increase. While costs remained stable, the impact of lower oil prices drove the airline’s overall costs down by 5%.



Ryanair has flown with ever fuller planes, with almost a third fewer empty seats last year. The Irish airline expects to fly its planes even nearer full capacity through 2015-16, despite an ongoing expansion with continued deliveries from a massive order of Boeing 737s. The airline added that it will be leasing extra planes in the summer to meet demand.



Chief financial officer Neil Sorahan said fares would drop further, by an average 2-4%, next year as Ryanair pushed for passenger numbers. He said the airline’s policy was to “always hit the passenger target, whatever the fare”.



Sorahan said the airline expected to grow across Europe but particularly in Germany, where rivals had cut back some of their schedules.



Ryanair launched its “always getting better” strategy in late 2013 to improve services after customers tired of its punitive charges and inflexible policies. Improvements have included reduced fees, more carry-on baggage and allocated seating. It has also sought to woo business passengers.



The second year of a three-year programme will see Ryanair make further changes, including lower charges for transporting skis and bikes, and introducing a live price comparison feature showing if tickets are available cheaper on other airlines. The airline is set to axe its peculiar on-time arrival bugle from all services from September.



The move to stop “unnecessarily pissing people off”, in the words of chief executive Michael O’ Leary, coincided with two profit warnings in late 2013. Ryanair admitted it had failed to keep up with the expectations of consumers who turned to its more passenger-friendly rival, easyJet.



O’Leary, said: “This 66% increase in net profit demonstrates the enduring strength of Ryanair’s lowest fare/lowest cost model which has been transformed by the success of our ‘always getting better’ (AGB) customer experience programme. AGB has attracted millions of new customers to Ryanair.”

Ryanair shares rose 5.4% to close at a fresh record high of €11.47. EasyJet’s shares plunged earlier this month when it warned alongside first-half results that disruption at French airports and currency movements would dent full-year profits.

Sorahan said that their outlook was “cautious” for 2016 but still forecast a further 10% leap in profits to up to €970m - as the impact of lower oil prices continues to keep costs down. Its forecast takes into account an expected fare war next winter when it says: “It would be foolish not to expect some irrational pricing response from competitors who cannot compete with our lowest costs”.