Ryanair trumpeted the success of its image makeover after soaring passenger numbers helped the Irish airline to post a 66 per cent rise in full-year profit.

The budget carrier, whose outspoken CEO Michael O’Leary softened his notoriously no-frills business model last year, said passenger numbers grew nearly three times faster than original estimates thanks to a combination of improved service and lower fares.

Management forecast a further 10 per cent increase in the coming year and said the growth would not come at the cost of lower fares this summer, easing concerns that had hit share prices across the sector in recent weeks.Most of the growth was attributed to Ryanair’s Always Getting Better programme, aimed at turning round its reputation for poor customer service to better compete with rival Easyjet and Europe’s flag carriers.

“Always Getting Better is the key. It has been very well received,” said finance chief Neil Sorahan, crediting lower fees, flexible tickets for business travellers and a move away from small regional airports for boosting the number of passengers per flight by five per cent.

The company’s full-year results lifted its share price 5.4 per cent by 1041 GMT, against a 0.4 per cent gain for Easyjet.

“I think that momentum will continue as it’s almost like a hurdle’s been removed and people can appreciate the low cost,” said Mark Denham, European equities fund manager at Aviva Investors, one of Ryanair’s 10 biggest shareholders.

Some investors took fright when Easyjet warned this month that revenue per seat would be down by about four percentage points in the three months to June, sparking fears of aggressive price cuts by Ryanair.

But Sorahan said its fares would be “broadly flat” in the six months to September.

“Everyone was holding their breath for the past fortnight, waiting for the largest low-cost carrier to show the way... The sector can exhale now,” Investec analyst Robert Murphy said.

Ryanair’s shares have surged since it announced it would compete for passengers who are less price-sensitive. The shares are up 58 per cent on a year ago, compared with an increase of one per cent at Easyjet.

Analysts said that Ryanair’s growth is not necessarily bad news for Easyjet because it competes directly only on about five per cent of routes and retains a big lead on serving primary airports.