LONDON--Ryanair Holdings PLC (RYA.DB) on Monday raised its full-year forecasts after posting a 21% increase in third-quarter profit, more evidence of how Europe's discount airlines are benefiting from underlying growth in passenger traffic amid cutbacks by many of their rivals.

Ryanair said net profit rose to 18.1 million euros ($24.37 million) for the three months to Dec. 31, 2012, from EUR14.9 million in the same period a year ago, fueled by strong pre-Christmas bookings and higher fares. Revenue rose 15% to EUR969 million from EUR844 million.

The airline, Europe's largest discount carrier by passengers, raised its full-year net profit forecast to EUR540 million from a previous forecast of EUR490 million to EUR520 million.

The Irish airline's strong performance and bullish outlook contrasts with much of the rest of the European sector, where higher-cost network carriers are struggling to stem losses at their domestic and regional operations.

SAS A/B (SAS.SK), the Stockholm-based airline that is the biggest carrier in the Nordic region by passengers, Monday said it plans to cut an additional 200 administrative jobs in 2013 on top of the 800 administrative jobs it planned to eliminate under a restructuring plan started in November.

The Scandinavian airline is trying to regain its financial footing after a long string of losses. It plans include selling assets, while it has reworked labor contracts and negotiated new financing deals.

British Airways-parent International Consolidated Airlines Group S.A. (IAG.LN) is undertaking a similar exercise at its Iberia unit in Spain, where staff face a management deadline Thursday to agree to new pay and working conditions. Deutsche Lufthansa AG (DLAKY), Europe's biggest airline by passengers, smaller German rival Air Berlin PLC (AB1.XE), and Air France, owned by Air France-KLM SA (AF.FR), are also reorganizing their domestic operations to stem losses.

The upshot is that Europe's lower-cost budget carriers such as Ryanair and smaller U.K.-based rival easyJet PLC (EZJ.LN) are continuing to pick up market share and benefit from their rivals flying fewer aircraft on European routes, allowing them to push through price increases.

"Our (third-quarter) profit of EUR18 million was ahead of expectations due to strong pre-Christmas bookings at higher yields," said Ryanair Chief Executive Michael O'Leary.

"The 8% rise in (average) fares reflects our improved customer service, record punctuality and the successful roll out of our reserved seating service," Mr. O'Leary said. Ryanair, which pioneered the "sit-anywhere" policy in Europe's airline industry, now lets passengers reserve certain seats if they pay extra.

For the quarter, the airline said a 3% rise in traffic to 17.3 million passengers, an 8% rise in ticket prices, and higher non-fare revenue offset a 24% increase in its fuel bill.

Ryanair said its new full-year net profit forecast represents a 7% increase on last year's profit despite a 19% likely increase in oil costs.

Separately, Ryanair said it was confident that its "radical and unprecedented remedies package" of concessions submitted to the European Commission would trigger approval for its proposed takeover of Irish rival Aer Lingus Group PLC (EIL1.DB).

The European regulator just days ago extended the deadline of its review of Ryanair's EUR694 million bid to March 6, after the airline submitted another revised package, its third bid.

The latest offer would see regional carrier FlyBE Group PLC (FLYB.LN) take over 43 of Aer Lingus's routes, while IAG unit British Airways would operate fewer routes than originally foreseen but would hold on to the three lucrative London Heathrow to Dublin routes.

"We believe these remedies address every current Ryanair/Aer Lingus crossover route and all other competition issues raised by the Commission in its statement of objections," said Mr. O'Leary.

Also Monday, rival Nordic carrier Finnair Oyj (FNNNF) said that CEO Mika Vehvilaeinen is to resign from the company as of Feb. 28 to become the CEO of Cargotec Oyj (CGCBV.HE). Finnair said it has started its search for a successor and that meanwhile it had appointed Ville Iho, chief operating officer, as deputy CEO to lead the company in the interim.

-John Stoll and Dominic Chopping in Stockholm contributed to this article.

Write to Marietta Cauchi at marietta.cauchi@dowjones.com

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