Record £284m at Ryanair as fare cuts are curbed

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Reporting half-year earnings after tax at an all-time high of e408 million (£284 million), chief executive Michael O'Leary said: "Our air fares have dropped 1% over the summer and we've seen profits go up 24% because we have carried 20% more passengers than a year ago.

"That is all down to our competitors putting up their prices by putting up their fuel surcharges."

Passengers hoping for deep cuts in Ryanair air fares during the winter to keep people flying will also be disappointed as O'Leary said he did not now expect the airline's yields - the money it makers per passenger - to drop as far as many City analysts feared in the coming months.

"We had said fares could be going down by as much as 10% over the winter," he said. "Now we expect that to be nearer 5%."

The better yield outlook will also see Ryanair produce even bigger profits in the year to the end of March than expected as O'Leary increased his forecast to e470 million from e440 million.

Despite Ryanair's spiralling growth - it will carry more than 40 million passengers this year and about 50 million in 2008 - profits at the group are slowing appreciably.

In the year to March 2007, it posted profits growth of 33%. This year, that rate of growth will slow to about 17.5% and that despite the benefit of two Easters: the key long holiday weekend was late this year but will be significantly earlier in 2008 and fall within Ryanair's financial year.

More and more of Ryanair's revenues are coming from getting extra money out of passengers, O'Leary admitted.

Ancillary revenues - including onboard sales of food and drink, and also more controversially Ryanair's strict rules on "excess" baggage - made up a sixth of the carrier's e1.55

billion income in the six months to 30 September.

Ryanair has a target of getting ancillaries up to 20% of revenues and that will be helped by the launch next year of plans to charge for mobile phone usage on board.