The travelling public responded to the lower fares in huge numbers

Michael O'Leary, Ryanair's CEO

Europe's largest no-frills carrier saw its post-tax profits increase to 28.8m euros ($24.9m; �17.6m) during the last three months of the year.

Ryanair's success stands in stark contrast to British Airways which reported a pre-tax loss of �160m on Monday.

The global airline industry has been suffering a severe slump in passenger numbers since the 11 September terrorist attacks in New York.

And the global economic downturn has hit non-budget airlines particularly hard, due to a downturn in business travel.

But Ryanair launched an aggressive price-slashing campaign in order to win customers back.

Cutting fares

Fares averaged �35 last year and the company is promising to cut them even further.

Ryanair lacks transatlantic and business flights and was less hit by the post 11 September factors.

The company uses smaller airports, with smaller charging fee.

"The travelling public responded to the lower fares in huge numbers with the result that we carried more than 10 million passengers in a calendar year for the first time in our history," said Ryanair's chief executive Michael O'Leary.

Longer term, this is the best airline growth and profitability story in Europe

Martin Borghetto, Morgan Stanley

As long as passengers are not allocated places on the company's planes, a plane can be back in flight just 25 minutes after landing - half of the average time for other companies.

The number of flight attendants was cut to three instead of six.

Passenger volume increased by 30% between October and December while the all-crucial load factor rose to 79%.

"Longer term, this is the best airline growth and profitability story in Europe,'' said Martin Borghetto, an analyst at Morgan Stanley.

Placement planned

The airline also said it is placing 26m shares, or 3.6% of its equity.

The cash will be used to pay for the 100 new Boeing 737-800 aircraft the company is introducing to its fleet over the next seven years. It also has options on a further 50 Boeing jets.

The company is planning to establish several more routes to big European airports in the nearest future.

Currently the company uses smaller airports with low charging fees, but situated rather far from business centres, like Frankfurt Hahn airport which is at least one hour's drive from Germany's main financial centre.

Analysts believe Ryanair should start using major airports as well, if it wants to tap into the lucrative business market.

At 0930 GMT, shares in the Irish airline were 10p lower at 405p.