As fuel prices soar to unprecedented levels - and amid dire warnings of the demise of airlines - the Irish budget airline Ryanair has said that while it only expects to break even next year as a consequence of the escalating crisis, it revealed a 20% rise in annual profit for the past year.

Key to its plans however - Ryanair - which began operations at George Best Belfast City Airport last October - needs the much-debated extension to the runway.

The company has always been mindful that its modern Boeing 737-800 aircraft are subject to restrictions on the number of passengers they can carry on take-off.

The aircraft, which has 189 seats, is permitted to carry only 140 passengers on departing flights, but if the runway were lengthened they would be able to carry a full payload.

Clearly, the company would then be in a better position to weather the turbulence ahead if the promised developments proceed - especially now as the airport has officially been put up for sale by its current owners.

However, while this week warning that if oil prices stay at around $130 a barrel it would only expect to break even in the year to the end of March 2009, the company reported a healthy net profit to €480.9m ($748m; £381m) in the 12 months to the end of March, compared with €401.4m a year before.

Michael O'Leary, Ryanair Chief Executive said that it would absorb high oil costs even if profits fell in the short term but admitted that rising oil prices and an economic slowdown have raised concerns about the profitability of airlines.

However, the Ryanair boss said it was better placed than other European airlines to cope with any downturn.

"Based on forward bookings, we now believe it likely that average fares for the coming year will rise by approximately 5% and if oil prices remain at $130 per barrel, then we expect to accordingly break even for fiscal 2009," he said.

Last month Ryanair said it was to increase its check-in charges by £1 to £4 per passenger and by £2 to £8 per bag to try to reduce its airport costs.

Mr O'Leary said: "We are trying to persuade passengers to carry hand luggage, and to fly in a way that cuts our costs to a minimum."

Billed as Europe's biggest low-cost airline, the company put a Boeing 737-800 aircraft into service at George Best Belfast City Airport, last year.

Chief Executive Michael O'Leary said at the time: "In the coming year, 600,000 passengers will fly Ryanair to and from Belfast."

See: Is Runway Extension 'Key' To Belfast Airport Sale?

See: Ryanair Establish New Base In Belfast

(BMcC)