Surges in passenger traffic and ancillary revenue helped lift Ryanair's first fiscal quarter profit by 20% to a record EUR138.9 million (US$189.7 million) from the EUR115.7 million earned in the three months ended June 30, 2006.

In addition, it raised its full-year earnings guidance to a 10% improvement from the originally forecast 5% thanks to planned aircraft utilization and capacity reductions at London Stansted.

The LCC's first-quarter revenue of EUR693 million represented a 22% increase from the year-ago quarter. Ancillary revenue climbed 53% to EUR117.1 million, according to CEO Michael O'Leary, who said that ancillaries account for 17% of total turnover. That figure will rise to 20% over the next three years. Passenger numbers during the quarter jumped 18% to 12.6 million.

But it was the 5% increase in unit cost, which O'Leary said was driven by a doubling of charges at STN and rising charges at Dublin, that prompted the carrier's ire. "BAA Stansted doubling of airport charges since April 2007 have caused traffic declines at Stansted for the first time in 15 years. The current service provided by BAA at Stansted is nothing short of appalling," O'Leary said. As a result, Ryanair will operate just 33 of its 40 STN-based aircraft during the winter schedule "because Stansted's higher airport charges make it more profitable to ground these aircraft ... rather than fly them." He said "softness in yields" was a factor in the decision; "These capacity reductions should bring more stability to yields."

Winter passenger volume will grow 18% to 50 million rather than the previously forecast 24% to 52 million, while Ryanair's fiscal-year outlook "remains cautious" as yields in the current quarter are expected to be "slightly down" and second-half yields should fall 5%-10% year-over-year. The capacity cut and cost savings at STN are key to the raised full-year forecast.