Ryanair today raised its annual profits forecast on the back of a stronger than expected Christmas period.

Europe’s largest no-frills airline revised its full-year guidance from €800 million-€900 million to a new range of €950 million-€1.05 billion.

The airline issued a trading update on the back of a better than forecast Christmas and new year travel period.

This was “characterised by higher than expected close-in bookings at better than expected yields”.

January to April forward bookings are running 1% ahead of this time last year, while annual passenger numbers are expected to grow to 154 million from previous guidance of 153 million.

But Ryanair revealed that Austrian arm Lauda “continues to underperform” with average fares lower than expected over Christmas.

“This is a direct result of intense price competition with Lufthansa subsidiaries in both Germany and Austria who are engaged in below cost selling,” Ryanair claimed.

Lauda now expects to carry 6.5 million passengers in the year to March 2020 but at average fares €15 below budget, resulting in a higher annual net loss from under €80 million to around €90 million.

Ryanair will release results for kits third quarter on February 3 with a further update.