Ryanair may reverse growth strategy as fares fall

Ryanair, which has thrived on consumers trading down in the recession, said it was still winning substantial market share from major flag carriers Air France-KLM , British Airways and Deutsche Lufthansa .

But it said its first half profit rise had been helped by a 42 percent fall in fuel costs and masked a 17 percent decline in fares, with that fall in ticket prices set to accelerate in the second half.

Ryanair expects fares to decline by up to 20 percent in the last two quarters of its 2009/10 fiscal year, making each of those quarters loss-making, but affirmed its forecast for full-year net profit at the lower end of a 200 million to 300 million euro range.

Europe's biggest budget carrier said its talks with Boeing on an order for 200 aircraft had not progressed much, adding it could end its traditional relationship with the aircraft maker.

"We see no point in continuing to grow rapidly in a declining yield environment, where our main aircraft partner is unwilling to play its part in our cost reduction programme," Ryanair Chief Executive Michael O'Leary said.

"If we cannot invest our surplus cash efficiently in new aircraft, then we should distribute it to shareholders," O'Leary added.

Net profit before exceptional items in the six months to the end of September came in at 387 million euros (347 million pounds), compared with a forecast of 377 million euros by Ryanair's house brokers Davy.

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