Ryanair has reported a 6% increase in net profit to €1.316 billion for its financial year to the end of March.

The airline cited a combination of a 13% cut in average fares and the changes made in year three of its Always Getting Better programme as delivering 13% traffic growth as it carried a record 120 million customers.

Looking ahead, it expects average fares for FY18 to fall by between 5% and 7% due to "weaker sterling and continuing excess capacity in Europe.

"Ancillary revenue per customer will likely be flat as we continue to drive penetration with discounts," Ryanair's report states.

"We expect our fuel bill will fall by €70m in FY18, but we will pass on these savings to customers in lower air fares."

It expects profits to rise further, reaching €1.4bn-€1.45bn this year, as traffic swells 8% to 130 million passengers per annum.

Returning to the year just passed, average fares fell to €41. Sales advanced to €6.64bn. Ryanair became the industry leader in terms of capacity, with load factor climbing to 94%.

Unit costs were cut 11%. Over €1bn was returned to shareholders via share buybacks.

Michael O’Leary, Ryanair CEO, said:

“We are pleased to report a 6% increase in profits after tax] to €1.316bn, despite difficult trading conditions in FY17 caused by a series of security events at European cities, a switch of charter capacity from North Africa, Turkey and Egypt to mainland Europe, and a sharp decline in sterling following the June 2016 Brexit vote.

"We reacted to these challenges by improving our customer experience, and stimulating growth with lower fares.