Ryanair could add more than 55m to earnings each year thanks to the new measures, according to Davy analyst Stephen Furlong, who has crunched the numbers in a new report.

Ryanair's projections were based on the assumption that the number of passengers who currently have check-in baggage will remain the same after the charges were introduced. According to the company's passenger statistics, last year a quarter of its passengers had no bags, half of them checked in one bag and the remaining 25% checked in two bags or more.

The potential upside for Ryanair depends on how many passengers move to online check in, and decide not to bring extra bags. The Davy report argues that the new policies will discourage passengers from checking in bags and that they will, where possible, bring only hand luggage on board.

Furlong said if Ryanair can raise the number of customers who bring only hand luggage to 45% and encourage 80% of its passengers to check-in online, which the broker thinks is achievable this year, "the net impact is a positive 55m".

Ryanair has begun charging customers 7 for every bag they check-in. At the same time, it introduced an online check-in facility which offers discounts to passengers, cutting the price of their tickets if they check-in through Ryanair's website.

Announcing the introduction of the charges, which came into effect earlier this month, O'Leary said they would be revenue neutral.

The company expects the baggage fees to be offset by the discounts as more and more passengers check-in online. When baggage handling and airport costs are factored in, the company would stand to gain 22m in a full year, O'Leary said. "We will require fewer and less expensive airport facilities such as airport check-in and baggage hall facilities."

On the back of the detailed report into the company's growth prospects, published last week, Davy has upped its price target on Ryanair from 9 to 9.25. The company's shares are currently trading at 7.80.

The upgrade comes at the end of a challenging week for the company, following a bizarre incident in which a Ryanair pilot mistakenly landed an aircraft at an army base in Derry instead of setting down at Derry City airport.