Budget airline Ryanair posted its first fall in profits since 1989 yesterday, but said passenger numbers had reached a new high.

The Dublin-based no-frills carrier said pre-tax profits in the year to March 31 were down to 228.5m euros (£152.1m) from 264.5m euros (£176.1m) the year before.

Ryanair said price competition, the Iraq war, a weaker pound, higher oil prices and the threat of terrorist attacks had all contributed to adverse market conditions during the year.

But it said passenger numbers during the year had nevertheless grown by a record 47 per cent to more than 23 million.

Chief executive Michael O'Leary said Ryanair had significantly lowered fares while maintaining a world leading after-tax profit margin of more than 20 per cent.

"These results demonstrate yet again what a superb job the 2,300 people of Ryanair do in both good times and bad," he said.

But the company said pre-tax profits had fallen five per cent to 226.6m euros (£150.8m).

The airline said a lot of hysteria had been generated in recent weeks about higher oil prices.

It said it did not expect increases to damage or slow the growth of low-fare air travel.

It said it would absorb any rises by cutting costs in other areas and pledged that it would not impose fuel surcharges on customers.

The airline said it believed oil prices would fall during the winter or next year.

During the year, the airline opened two bases at Rome Ciampino and Barcelona Girona, and launched 73 routes, boosting its network to 150 routes.

Ryanair said current load factors - how full its aircraft are - were higher than at this time last year.