Ryanair will slash fares by up to a fifth this winter in a bid to keep people flying during the recession.

"Average fares this winter will be less than £20," said chief executive Michael O'Leary. "While that means great news for passengers, as for shareholders, well that's not so good."

O'Leary opened up the latest front in the airline price war as he admitted profits in summer traditionally its strongest trading period crashed by almost 50% to €215 million (£169 million) in the six months to the end of September on the back of a doubling in fuel costs from the previous year.

Explaining the decision to reduce fares more deeply than previously forecast he predicts cuts of between 15% and 20% O'Leary said: "We can see what forward fares are looking like. Clearly passengers are becoming more price-sensitive. Clearly the biggest thing overhanging passengers and us is the recession.

"But these price cuts will mean more bankruptcies at other weaker airlines, and we hope to help them shuffle off their mortal coil."

O'Leary said the cuts should mean Europe's biggest budget airline will continue to attract customers, mainly in continental Europe, growing its passenger numbers by 14% this year to a total of 58 million. On that basis, he is holding to his forecast that Ryanair will break even in the financial year to the end of next March. It had record profits of €481 million last year.

The airline said it is cutting fares on the back of a falling oil price. In the current trading quarter, it is being hammered by its decision to buy 80% of its kerosene for the three months at the equivalent of $124 per barrel of oil.

However, it has taken the decision to leave itself unhedged for the January-March quarter, which could see it reap the benefits of an oil price that has more than halved since the summer. O'Leary believes oil will fall to about $50 a barrel during that period.

He said his plans to launch a transatlantic budget airline separate from Ryanair and charging £10 one-way have been delayed by a failure to secure aircraft for the venture.