Jan. 27 (Bloomberg) -- Ryanair Holdings Plc, Europe's biggest low-cost airline, will probably say fiscal third-quarter profit rose 12 percent after it added routes, increased capacity and cut fares to stimulate demand, said analysts including Andrew Light at Citigroup's Smith Barney unit.

Net income in the three months ended Dec. 31 probably rose to 48 million euros ($60 million), or 6.3 cents a share, from 43 million euros, or 5.7 cents, in the year-earlier period, according to the median forecast of four analysts surveyed by Bloomberg News. Sales probably rose 38 percent to 257 million euros, according to the analysts.

The Dublin-based carrier, which acquired KLM Royal Dutch Airlines NV's discount Buzz unit in April, is buying Boeing 737-800 planes and adding airport bases such as Stockholm-Skavsta. It's winning market share from British Airways Plc and other full- service airlines by offering one-way fares to 52 European cities for as little as 1 pound ($1.82) plus taxes and airport fees.

``I'm expecting some good volume growth'' because of the Buzz purchase, said Alan Beaney, who manages 570 million pounds at Principal Investment Management in Sevenoaks, England. ``There's a question about margins, and people will be looking at that.''

Ryanair has said that the average one-way ticket price was 46 euros in the year ended March 31 and that it would fall 10 percent to 15 percent this year, partly because of exchange rates.

Passenger Growth

The airline carried 6.1 million passengers in the three months through December, an increase of 54 percent, as it added 59 percent extra capacity. This led to a 2.3 percent decline in load factors, a measure of the proportion of seats filled.

``Ryanair is expected to have the best financial performance among the European airlines in the December quarter,'' said Light, the Citigroup Smith Barney analyst who rates the stock ``buy.''

The company is scheduled to release earnings at 6 a.m. Dublin time Wednesday. Investors will focus on the outlook for business in the fourth quarter ending March 31 as well as the forecast for next year, said Shane Matthews, an analyst at NCB Stockbrokers, who rates Ryanair shares ``buy.''

``The company's going to be cautious,'' said Matthews. ``Consumer demand is very price sensitive. People will be focused on what current trading is like and whether that competitive environment will improve or get worse by the summer.''

The market will also look for comments on a European Commission probe into its marketing agreement with Brussels Charleroi airport, analysts said. The commission is expected to publish its decision on whether the accord includes illegal state aid for Ryanair on Feb. 3, according to the carrier.

Charleroi Costs

The ruling on Charleroi, about 60 kilometers (37 miles) south of Brussels, is expected to establish clearer rules on contracts between state-owned airports and carriers in the 15-nation European Union. Public airports account for about 18 percent of Ryanair's passengers.

A negative decision on the Charleroi deal, forcing the airline to change state-owned airport agreements, would cost ``no more than 3 percent of earnings,'' according to Matthews. The airline would be able to recover the loss by renegotiating contracts and through fares, he said.

Ryanair will probably have to repay 9.6 million euros of promotional subsidies to Charleroi as part of the decision, said Light.

The Irish airline's passenger count in the 12 months through December was 21.4 million. It plans to carry almost 24 million people in the fiscal year ending March 31.

Fiscal third-quarter net income forecasts ranged from 46.6 million euros to 50 million euros. Sales estimates ranged from 254 million euros to 258 million euros.

Last Updated: January 26, 2004 19:08 EST