Company warns Buzz airline workers of shutdown over work practicesas it upgrades its full-year profits forecast to €235m

Ryanair again delivered record profits yesterday as it threatened to shut the Buzz budget operation acquired only days ago if work practices there were not changed.

Reporting a 50 per cent rise in after-tax profits to €43.2 million in the three months to the end of December, Ryanair increased its full-year profit projection by €5 million to €235 million after tax.

Earnings per share increased to 5.72 cents in the quarter from 3.98 cents in the same period a year previously as revenues rose 37 per cent to €185.9 million from €135.5 million.

The airline said the number of passengers carried rose 46 per cent to 3.93 million, with its overall load factor increasing to 86 per cent from 79 per cent due to an 8 per cent reduction in average fares.

The company said the load factor on four routes opened at Hahn near Frankfurt in December was more than 80 per cent. It also projected load factors in the high 70s at Bergamo.

Analysts welcomed the results but the shares lost almost 7 per cent yesterday as investors took profits amid a slump on world markets after a good run on the share. They closed 47 cents weaker at €6.30.

The airline's joint deputy chief executive, Mr Michael Cawley, said it expected only a "blip" in sales if there was war in Iraq.

He also said he believed the European Commission would rule in favour of Charleroi airport in Belgium in an investigation into alleged illegal state aid in the airport's package with Ryanair.

The airport's case was watertight legally, he said, adding that the Commission would encounter political difficulty if it tried to constrain the growth of regional and secondary airports favoured by Ryanair and its no-frills rivals.

The acquisition of the London-based KLM subsidiary Buzz in an "opportunistic" deal ensured Ryanair overtook EasyJet as Europe's biggest discount carrier, it said.

As Ryanair prepared to open a new base tomorrow at Bergamo near Milan, it said the 24 million passengers expected next year meant it could challenge Air France for third place in the overall European airline market. However, the projection excluded figures from Air France's domestic routes. The passengers number projected by Ryanair included four million Buzz passengers, double the number due to be carried this year.

Mr Cawley said it wanted up to 100 redundancies from the 570 staff at Buzz after an initial examination into what would be required to secure immediate profits from a business that lost €30 million in each of the past two years.

But, after Ryanair's chief executive Mr Michael O'Leary threatened to shut Buzz and take over its airport slots if unionised staff refused to adopt Ryanair's "low-cost" work model, Mr Cawley said he did not believe that eventuality would arise.

The first trade union reaction at the Stansted-based Buzz came from the British Airline Pilots' Association, which adopted a conciliatory tone. While its spokesman said there was a "clash of cultures and working practices" between Ryanair and Buzz, "we will have to find a way on these together".

The Buzz brand will disappear when its business is subsumed into Ryanair after the €23.9 million takeover is finalised in April.

Mr Cawley said the carrier's separate marketing budget would be eliminated as it moved away from "congested" airports.

This suggests that services to Charles de Gaulle airport in Paris, Schipol in Amsterdam and Frankfurt will stop soon as Ryanair cuts staff and increases the frequency of flights on other Buzz services from Stansted. Two domestic routes in France are expected to be dropped.

Ryanair traditionally shirks acquisitions. The airline accepted that certain commentators believed it was "biting off more than we can chew", but Mr Cawley said the takeover would require as much management time as the development of a new hub.

Mr Cawley rejected criticism by KLM's chief operations officer, Mr Rob Ruijter, of its presentation of the Buzz deal. While Mr Ruijter had said Ryanair's use of €19 million in cash from future seat sales to reduce the net cost of the deal to below €5 million was "nonsense", Mr Cawley claimed it was not unusual for buyers and sellers to form different impressions of the same deal.