Ryanair has reported a sharp fall in quarterly profits after it was fined by Italy’s competition watchdog for abusing its market position over travel agencies.

The budget airline posted post-tax profits of €30m (£26m) for the three months to December, down from €149m (£112m) a year earlier – an 83% drop.

But the company remained confident saying it expected passenger numbers to grow by 4% to almost 208 million this year. It expects average fares to increase by between 8% and 9% this year, more than the 7% it predicted in November.

In December, the Italian regulator fined Ryanair €256m (£222m) for “abusing its dominant position” by blocking travel agencies’ access to its services.

Releasing its quarterly results on Monday, Ryanair said it had appealed the Italian fine, calling it “baseless”.

At the time of the ruling, the Italian Competition Authority said the company had “put in place an elaborate strategy” making it harder for online and traditional travel agencies to buy Ryanair flights through the airline’s website.

It said the airline’s strategy blocked or hindered purchases, or made them “economically or technically burdensome”, particularly when flights were combined with services from other airlines or with tourism and insurance products.

The airline said it was “confident” the fine would be overturned on appeal.

Ryanair made headlines last week after boss Michael O’Leary rejected the idea of using Elon Musk’s Starlink technology to provide wifi on flights.

It resulted in an online spat between the two leaders, which the firm said had led to a slight rise in bookings, thanking Musk for the publicity.

O’Leary said on Monday that full-year net profit could reach as much as €2.23bn (£1.9bn).

But he said this forecast “remains exposed to adverse external developments” including the possibility of conflict escalation in Ukraine and the Middle East.