Aer Lingus has recorded an operating loss of €36.1m for the first three months of the year and upgraded its 2012 operating profit forecast.
It said it now expected to match last year's €49m as higher revenue per passenger mile compensated for growing costs.
The airline had warned in February that fuel costs would cause profits to fall in 2012 from 2011 levels.
It noted losses were almost a third lower than in the same period in 2011 and said that the business is usually loss making in the quarter.
The airline had reported operating losses of €53.7m the same time last year.
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Aer Lingus chief executive Christoph Mueller said industrial action at the airline during that period last year had cost it €15m in lost revenue.
Total first quarter revenues this year rose by 15.4%, Aer Lingus said. Short haul passenger numbers rose by 12.6% to €148.9m while total flown short haul passengers - including Aer Lingus Regional operations - increased by 7.8%.
It said its long haul passenger fares jumped 24.6% to €52.7m in the first three months of the year - beating the airline's forecasts.
Aer Lingus said that during the quarter, it incurred a higher level of volume related costs such as airport charges, fuel and the activity related element of staff costs. This was due to the capacity increasing by 4.9% in the absence of any industrial action this year.
Operating expenses in the first quarter increased 5.9% with lower aircraft hire charges helping to offset a fuel bill that was 31% higher than the year before.
Aer Lingus CEO Christoph Mueller said that the airline now shares the more upbeat view on industry trends expressed in IATA's April 2012 airline business confidence survey. He said that if current trends continued, operating profits at the airline in 2012 should match that achieved last year.
''However the performance of certain short haul routes is weaker than expected and our business continues to be subject to inflationary cost pressures,' he added.
He said that the airline remains focused on its cost base and continue to ''explore measures to protect the group's profitability for the remainder of 2012 and beyond''.