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Low cost airline Ryanair has reported a 33 per cent rise in annual profits, with the Irish carrier's performance lifted by rising passenger numbers and ticket prices.

Adjusted profit after tax climbed to €401.4 million (£272 million) in the year to March 31st, the company revealed in a statement.

Passenger traffic was up 22 per cent to 42.5 million over the year, while the cost of average fares rose by seven per cent.

Ryanair said the rise in ticket prices had been driven by competitor fare increases, new checked baggage fees that have been implemented to encourage passengers to travel with carry-on luggage only and competitor fuel surcharges.

The budget airline said that a 50 per cent increase in fuel costs to €693 million (£469 million) had caused its unit costs to jump by nine per cent.

Despite posting a better-than-expected performance for the year, Ryanair also warned its shareholders to "remain cautious and conservative" in light of an apparent "softening" of market conditions.

Ryanair said that while it was confident that passenger traffic would grow by 22 per cent to over 52 million during the coming year, yields were likely to be up to five per cent lower if the market slowdown continued.

The airline stressed that it was responding to the trend with "aggressive" price promotions, which include the recent launch of its "lowest price" guarantee.

Referring to other market developments, Ryanair attacked the introduction of "significantly higher" airport charges at Stansted and Dublin airports and said it was continuing to press for the break-up of British airports operator BAA, whose dominant position in the market is currently being investigated by the UK competition authorities.

The airline also criticised the "unprecedented" decision of the European Commission to review its hostile €1.48 billion (£1 billion) bid for rival Irish-based carrier Aer Lingus.

Ryanair claimed the investigation, which has been ongoing for the past six months, went against the commission's policy of encouraging consolidation in the airline industry and vowed to take its case to the European courts if regulators refuse to allow the proposed merger.

"Any failure by the European Commission to approve this merger will be an entirely political decision to put the narrow political interests of the Irish government before those of European competition and European consumers," claimed Ryanair.