By Max Clarke

Profits at Ryanair surged 26% in the year ending March 31st 2011, far outpacing the Dublin based airline’s competitors.

This is despite the airline (LSE: RYA, NASDAQ: RYAAY) being forced to pay compensation under the ‘discriminatory’ EU 261 regulation for the 14,000 flights disrupted as a result of volcanic ash, snow and ground force strikes.

Though Europe’s leading low-cost airline predicts flat profit growth for 2012, high oil prices will force their competitors to raise prices which will erode their profits.

Ryanair’s financial performance is described by CEO, Michael O’Leary as ‘one of the best in the industry”. Despite paying out €850 million to shareholders and acquiring 40 new aircraft, the group maintains cash assets of €3 billion.

O’Leary made the following predictive comment for 2012:

Since we have limited visibility on bookings, we remain concerned at the impact of the recession, austerity measures, and falling consumer confidence on fares. Despite these concerns we cautiously expect that our average fares will rise by up to 12% this year due to a better mix of new routes and bases, slower traffic growth, and higher competitor fuel surcharges. However, these higher fares will only help us to finance higher fuel and rising sector length related costs, and accordingly, we expect profit after tax for FY12 to be similar to the FY11 result of €400m.