Analysis: Ryanair believes it will increase its passenger numbers by more than a fifth this year, writes Jane O'Sullivan

Ryanair has emerged from the latest troubles to afflict the airline sector fighting fit.

Despite a 52 per cent rise in its fuel bill last year and continued volatility in the price of oil, the airline's low-cost model remains intact and should continue to win it more customers in the years ahead.

Ryanair, which sees itself as the Tesco, Dell or Wal-Mart of its sector, clearly believes that it will and is targeting passenger numbers of 70 million by 2012.

The airline, which carried more than 27 million people across Europe last year, expects to increase this figure by more than a fifth this year.

It now expects to carry around 35 million passengers, up from its previous forecast of 34 million.

It also believes it can turn in a 10 per cent increase in after-tax profit to €295 million, a figure that would be closer to €400 million were it not for further expected increases in the price of oil.

While the cost of fuel remains a significant uncertainty, the airline has moved to protect itself from the worst of the fluctuations in the oil price by hedging 75 per cent of its fuel costs for next winter.

Indeed, Ryanair believes that the increase in the cost of fuel has in some ways played into its hands as compensatory fare hikes by its rivals have pushed more passengers its way.

Meanwhile, it expects the pricing of new aircraft and new airport deals to help it continue to drive costs downward and offset the rising fuel bill.

The airline, which now flies on 229 routes across 20 countries, expects to announce the opening of one or two new European bases and 30 to 40 new routes over the coming weeks.

The focus will be mainly on western Europe, including regional Spain, with some further development in eastern Europe, where it already operates in Poland, the Czech Republic and Slovakia.

Its fleet expansion continues apace with up to 147 new Boeing aircraft to be delivered by 2012 to support its continued expansion.

Indeed, chief executive Michael O'Leary suggested yesterday that the airline, which expects to overtake British Airway's monthly traffic levels later this summer, would not only be exercising all existing aircraft options but could well be looking for further options.

"I suspect we will be taking additional options," he said.