EasyJet, the UK's leading low-cost airline, has maintained its forecast for a 20 per cent increase in underlying pre-tax profits in its financial year to the end of September, in stark contrast to the profit warning issued this week by rival Ryanair.

The Irish carrier, the largest no-frills airline in Europe measured by passenger numbers, had warned that higher oil prices, weakening consumer sentiment and the strong risk of recession could lead to a sharp decline in its profits in the year to March 2009 - possibly by as much as 50 per cent.

However, EasyJet said its total revenues per seat had risen "ahead of expectations" by 0.5 per cent in its first quarter from October to December, helped by the strength of the euro and the introduction of charges for checked-in baggage.

Revenues for the current second quarter were also expected "to continue to perform ahead of our original expectations", it said.

Forward bookings were "in line with expectations in spite of the uncertain macroeconomic environment".

The carrier derives a significant proportion of its revenues in euros and the group said that most of its growth in passenger numbers in the first three months was achieved through its development of markets in continental Europe, in particular Italy, Spain and Switzerland.

As a result of the investment in these new operating bases total non-UK originating passengers increased 22 per cent in the period. UK-originating passenger numbers rose just 5 per cent.

The airline flew with slightly more empty seats in the first quarter from October to December, with a deterioration in the load factor year-on-year from 81.7 to 80.8 per cent.

The trend accelerated in January with a decline of 2.9 percentage points from 74.9 to 72 per cent.

However, EasyJet said its forward bookings for February and March showed "an improving trend" and it expected only a slight decline in loads for the second quarter, similar to the fall in the first three months. It has cut its lead-in fares to stimulate more traffic.

Rising ancillary revenues, including the baggage charges and commission earnings from areas such as hotel bookings, car hire and travel insurance, are driving the revenue performance.

While total revenues per seat rose 0.5 per cent in the first quarter, passenger revenues per seat fell 4 per cent due to weaker fare levels, but ancillary revenues per seat including bag charges jumped 42.6 per cent.

Overall in the first quarter turnover increased 14.1 per cent to £418m ($812m), passenger numbers rose 12.4 per cent to 9.1m, while capacity measured by the number of seats rose 13.6 per cent.

EasyJet shares closed 4.91 per cent lower at 426¼p.