Ryanair has reported better than expected third quarter after-tax profits of €18.1m, a 21% increase on the same time last year.

The airline also raised its profits outlook for the full year.

The increase in quarterly profits in the three months from October to December came despite an €81m increase in fuel costs as the price of oil jumped by 22% from $84 a barrel to $102.

Ryanair said its revenues rose by 15% to €969m as traffic grew by 3% to 17.3 million passengers.

Its ancillary revenues performed ''strongly'' and rose 24% to about €13 per passenger.

Ryanair said its third quarter profits were head of expectations due to strong pre-Christmas bookings at higher yields.

The airline said it has paid a second special dividend of €492m (0.34 cent per share) to shareholders in the third quarter, bringing to €1.53 billion the funds returned to shareholders over the past five years.

Looking ahead, Ryanair said its fourth quarter traffic - as previously guided - will drop by about 3% below last year as the airline is grounding up to 80 planes. It said this will limit the impact of high oil prices, high airport fees at Dublin and Stansted, and seasonally weaker fourth quarter demand.

But ''on the basis of this improved Q3 result, our capacity cuts and limited visibility over Easter bookings and yields, we now expect our full year profits to exceed our previous guidance (of €490m to €520m) and rise close to €540m, a 7% increase on last year's profits despite a 19% increase in our oil costs,'' the airline said.

Ryanair shares ended the day 2% lower on the Dublin stock exchange, finishing the day at €5.38.

Ryanair gives EU ''unique set of remedies' for AL bid

Ryanair also said today that it remains confident of getting approval from the EU Commission to take over Aer Lingus.

A statement from the airline this morning confirmed reports last week that it has submitted a "radical and unprecedented remedies package to the EU".

This plan involves two airlines basing aircraft in Ireland and taking over a substantial proportion of Aer Lingus' short haul routes. Media reports have suggested that those airlines are Flybe and IAG.

''We believe these remedies address every current Ryanair/Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections,'' Michael O'Leary said.

Ryanair is making its latest offer to assuage the EU's concerns about the impact of a takeover of Aer Lingus on competition for air travel between Ireland and the UK and on the ultimate impact on passengers from such a deal. The European Commission has knocked back Ryanair's previous takeover bid on those grounds.

''We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early March,'' Mr O'Leary added.

In its results statement, Ryanair said that its new routes and bases performed well in their first winter. Its 51st base at Maastricht opened in December and it will open six new bases from April in Eindhoven, Krakow, Sadar in Croatia, Chania in Greece and Marrakesh and Fez in Morocco.

''Significant capacity cuts by Legacy and other struggling EU carriers continue to offer us substantial growth opportunities across Europe,'' Michael O'Leary said. He said he expects further capacity cuts and restructuring in Europe as high fare, low making carriers struggle to compete with Ryanair.