DUBLIN, Ireland: Ryanair is forecasting a rebound in fares this summer as consumer demand recovers from the impact of high interest rates, the airline said.

Chief Financial Officer Neil Sorahan told Reuters that demand remains strong across Europe, with bookings for the summer running around one percent ahead of last year. "We operate in 37 countries, and we're seeing strong summer demand everywhere," Sorahan said.

The Irish low-cost carrier reported a 16 percent drop in annual profit for the financial year ending March 31, driven by a seven percent decline in average fares due to softer demand and a dispute with online travel agents. However, Ryanair expects to recoup most of that fare decline, projecting an increase of nearly seven percent in average fares for the current financial year.

"We're delighted that we're going to be recovering most of that seven percent, just not all of it," Sorahan said. The forecasted fare increase is higher than the four to six percent projection made by CEO Michael O'Leary in March.

Ryanair shares rose 3.4 percent to 23.17 euros in early trading, maintaining levels above the 21-euro threshold that could trigger a bonus of nearly 100 million euros for O'Leary if the share price remains above that level for 28 days.

The airline reported an after-tax profit of 1.61 billion euros (approximately US$1.8 billion), aligning with analyst expectations. It also carried a record 200 million passengers over the 12 months, although slightly below its initial target of 205 million due to Boeing delivery delays.

Ryanair expects to fly 206 million passengers by March 2026, with Boeing deliveries now back on track. The airline warned that it would consider delaying or canceling aircraft orders if the European Union imposes reciprocal tariffs, a concern amid ongoing trade tensions.

"If we were to see an increase in our prices, then we'd have to reserve our right to delay, cancel, or buy elsewhere," Sorahan said, reiterating comments previously made by O'Leary.

Despite lingering cost pressures from increased air traffic control charges and environmental taxes, Sorahan said the airline expects only "modest unit cost inflation" thanks to cost control measures and fuel hedging.

Analysts at Citi noted that investors are likely to respond positively to the airline's outlook, given the fare recovery and modest cost inflation forecast.