By Jonathan Davies

Budget airline Ryanair has raised its profit forecast for the year after returning to profit at the end of 2014.

Ryanair had initially forecast profits of €810m-830m, but it is now expecting between €840m and €850m. In the first three months of 2015, it expects traffic to be up 25% with falling oil prices cutting costs by 5%.

Ryanair said: "We believe that any growth in profits will be modest as our fuel is hedged at $92 [ a barrel], whereas some competitors... will be significant beneficiaries of lower oil prices and this may lead to downward pressure on airfares in 2015-16."

The airline reported profits of €49m in the final three months of 2014, compared with a loss of €35m in the same quarter in 2013.

Traffic was up 14% to 21 million and the average fare was up 2% to €40. Revenues grew by 17% to €1.13bn, with costs falling 6%.

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