Aer Lingus today reported a €72m operating profit for last year, down 32 per cent on 2004.
The airline said sales fell from €906m to €883m last year but the number of passengers increased by 15.6 per cent to eight million.
The result are expected to be the company's last set of results before the Government announces plans to privatise the airline later this year.
The company announced an earnings per share of 25.3 cents, up from 0.5 cent in 2004.
It said its total costs increased by €10.8 million despite fuel cost increases of €33.1 million
The airline said: "While the escalating price of fuel had a significantly adverse impact on costs, the general economic and industrial environment in which Aer Lingus operates was positively aligned to growth in 2005."
"The strength of the Irish economy was a particularly positive influence," it said.
Chief Executive Dermot Mannion said he was confident that a dispute over pensions with unions could be resolved prior to privatisation.
The airline believes that, if index-linked pension increases are to continue, as has been the practice for some time, a major deficit will arise, possibly up to €336 million.
Chairman John Sharman said: "Much has been achieved in the year under review through continued cost reductions, greater efficiencies and enhanced productivity"