Ryanair remains on track to land record annual profits, despite facing lower passenger growth and pilot costs of up to 100 million euro (£88 million) following its flight cancellation fiasco.

The budget airline stuck by its full-year profit guidance of between 1.40 billion euro (£1.23 billion) and 1.45 billion euro (£1.28 billion), but warned that passenger numbers would slow in the wake of the pilot rostering debacle.

The Dublin-based firm said full-year traffic was now expected to decelerate from 131 million customers to 129 million after it grounded 25 aircraft.

Ryanair has been hit with fierce criticism after 700,000 customers suffered when the airline cancelled 20,000 flights stretching from September 2017 to March next year due to an error over pilot holiday rosters.

The low-cost carrier said efforts were now under way to increase pilot pay by a fifth after poor planning decisions had led to a “perfect storm” of pilot shortages.

It came as Ryanair gave an update on its half-year performance, with pre-tax profits climbing 11% to 1.293 billion euro (£1.139 billion), up from 1.168 billion euro (£1.029 billion) over the period last year.

The jump was driven by a strong Easter period, helping bolster customer numbers by 11% to 72.1 million.

Shares were up more than 6% to 16.84 euro in afternoon trading.

Chief executive Michael O’Leary said: “These strong H1 results reinforce the robust nature of Ryanair’s low fare, pan-European growth model, even during a period which suffered a material failure in our pilot rostering function in early September.”

Revenues picked up 7% to 4.425 billion euro (£3.899 billion) for the half year, as it added 80 new routes and drove down air fares by 5%.

However, it said costs in its “sales, marketing and other” bracket rose 30%, as it forked out 25 million euro (£22 million) to compensate customers.

Neil Wilson, ETX Capital’s senior market analyst, said: “More passengers, lower fares and on course for another record profit – investors might be wondering what all the fuss was about in the wake of September’s cancellation fiasco.

“But beneath the rising revenues and passengers there are concerns about rising labour costs that will affect Ryanair’s unit cost advantage over peers.”

Focusing on Brexit, the airline said the UK Government “continues to underestimate” the flight disruption triggered by uncertainty over Britain’s exit from the European Union.

It added: “There remains a worrying risk of a serious disruption to UK-EU flights in April 2019 unless a timely UK-EU bilateral is agreed in advance of September 2018.

“We, like other airlines, need clarity on this issue before we publish our summer 2019 schedules in mid-2018 and time is running short for the UK to develop a bilateral solution.”

Airlines have endured a turbulent period in recent months, with a string of European carriers – Monarch Airlines, Air Berlin and Alitalia – going bankrupt.

Ryanair said it was poised to capitalise on the pressures facing the wider industry by growing its presence in Germany and Italy and adding more aircraft to “take up any slack” created by the demise of Monarch.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The good news for consumers is that overcapacity in the European airline market has driven fares down, and Ryanair expects this trend to continue throughout the winter, so passengers can perhaps afford the extravagance of spending a few more pounds on a bit more leg room.”