Ryanair raised its profit guidance for the year today after a sharp increase in the amount of revenue generated from car hire, hotel and travel insurance packages helped the airline to its best half-year results.

Michael O’Leary said that Ryanair should be able to push full-year post-tax profits up by an extra €30 million (£20 million) to €470 million despite a burgeoning fuel bill and concerns of tougher market conditions.

He added that yields — the average fare per passenger — were likely to fall by only about 5 per cent over the winter, instead of the 10 per cent decline feared in July.

Mr O’Leary said: “Based on our current third-quarter bookings, and the impact of Easter in the fourth quarter, we now anticipate winter yields will be somewhat better than previously forecast.”

Ryanair sent shockwaves through the City four months ago by announcing that it would be grounding 20 per cent of its fleet at Stansted over the new year to weather a downturn.

The airline said today that it would not be going back on the decision, and added that it had brought "more stability" to yields, given that many of the routes affected were non-profitable over the winter.

Half-year results today showed that the average fare fell 1 per cent to €49 in the six months to September 30.

However, pre-tax profits rose by 23 per cent to €459.5 million on a 20 per cent increase in passengers, to 26 million, and a 54 per cent surge in the money made from ancillary services, such as travel insurance, car hire packages and a new check-in fee of £2, introduced on September 20.

Total revenue in the six months rose €298 million to €1.26 billion.

The airline said today that ancillary revenues now accounted for 16 per cent of total turnover.

It is targeting 20 per cent and confirmed plans today to allow passengers to make mobile phone calls during a flight in the latest bid to reach the goal.

The inflight mobile phone service will be tested on 25 aircraft before the end of March.

Under the service Ryanair is expected to take a cut of the money generated from calls and texts.

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