Ryanair has settled its dispute with Aer Rianta over the temporary check-in and baggage-handling arrangements to prevail at Dublin Airport during the course of a £100 million terminal redevelopment project.

Work on the project, which had been delayed because of a dispute between the parties, resumed at midnight last night. It is aimed, on completion by mid-June 2000, to increase the airport's handling capacity from the present 13 million passengers a year to 20 million.

An agreement between lawyers for Aer Rianta and Ryanair was reached at the High Court yesterday. This comes a week after Ryanair obtained an interim injunction restraining Aer Rianta from interfering with or carrying out any construction at the airline's check-in desks at the airport and from removing any baggage conveyor belts servicing its check-ins.

On Thursday evening, the President of the High Court, Mr Justice Morris, went to the airport to see for himself the arrangements in dispute.

Outlining the agreement between the sides, Mr Bill Shipsey SC, for Ryanair, said the compromise involved Ryanair being offered two extra check-in desks and the exclusive use of a conveyor belt in the baggage hall.

He asked the court to discharge the interim injunction which Ryanair had obtained and adjourn the motion for an interlocutory order in the same terms until the trial of the action.

Mr Justice Morris consented and said he was pleased both sides had been able to reach a sensible arrangement.

In a statement afterwards, Aer Rianta said it was delighted with the outcome. It had come to court to have the injunction lifted and had succeeded. It could now get on with the task of developing the passenger terminal for the benefit of both airlines and passengers.

Ryanair's group director of operations, Mr Conor McCarthy, said his company was very satisfied with the increased allocation of facilities at check-in and in the baggage hall. Its only regret was that it was forced to institute High Court proceedings in order to obtain a fair and reasonable allocation of facilities during terminal disruptions.