Ryanair has blamed lower air fares for a 16% fall in profits to €1.6 billion despite a 9% growth in traffic to a record 200 million passengers.

The airline said it also saw a 4% increase in revenue from €13.4 billion to €13.9 billion, as well as a 9% reduction in operating expenses to €11.4 billion.

Spending on fuel and oil increased 2% to €5.2 billion, while staff costs were 17% higher at €1.8 billion largely because of its larger fleet. Fares were 7% lower, which stimulated demand but with lower returns.

Chief executive Michael O’Leary said: “The absence of a full Easter in Q1, consumer spending pressure and a big drop off in online travel agent bookings prior to summer ‘24 necessitated repeated price stimulation last year,” he said.

The board “remains committed” to shareholder returns and has approved a follow-on €750 million share buyback which will likely run over the next six to 12 months.

He said the airline is seeing “robust” travel demand across for the coming summer across its network.

“This year our constrained capacity growth is being allocated to those regions and airports who are abolishing aviation taxes and incentivising traffic growth,” he said.

He added that the airline expects European short-haul capacity to “remain constrained” for the next few years.

“These capacity constraints, combined with our substantial cost advantage, strong balance sheet, low-cost aircraft orders and industry leading operational resilience will, we believe, facilitate Ryanair’s controlled profitable growth to 300 million passengers per year by 2034.”

The airline said it cautiously expects to recover most, but not all of last year’s 7% decline in fares, which should lead to reasonable net profit growth in the year, though it istoo early to provide any meaningful guidance.

“The final full year outcome remains heavily exposed to adverse external developments, including the risk of tariff wars, macroeconomic shocks, conflict escalation in Ukraine and the Middle East and European air traffic control mismanagement and short staffing,” it said.