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Last Updated: Monday, 6 November 2006, 08:37 GMT
Rising profits lift Ryanair hopes
Ryanair plane
Ryanair has higher hopes for the winter period
No-frills airline Ryanair has lifted its profit forecasts for the year after reporting record half-year profits.

Net, or post-tax, profits for the six months to the end of September rose 39% to 329m euros ($418.2m; 220m), despite August's terror alerts raising costs.

"Business has grown strongly, we've grown traffic by 23%," Ryanair chief executive Michael O'Leary told the BBC.

Ryanair reiterated its plans to buy rival airline Aer Lingus. Last month it launched a 1bn bid for the carrier.

Mr O'Leary also confirmed Ryanair was going ahead with plans to sue the UK Government for 3.3m for losses incurred during the summer terror alerts when airport security was tightened.

Revenues up

Looking ahead, the Dublin-based airline raised its guidance for full-year earnings, saying it now expected net profits to rise by 16% to 350m euros compared with previous estimates of 335m euros.

We believe the combination of Aer Lingus and Ryanair into one strong Irish airline group would be rewarding for consumers

The increase came as the group said it expected yields - revenues made per passenger mile - to slip just 5% over the winter rather than the 10-15% previously forecast.

"Ryanair has again delivered record half-year profits despite intense competition and very high fuel prices," Mr O'Leary said.

Fuel costs at the airline rose 42% to 337m euros as oil prices rose to record levels above $78 a barrel during the period.

However, rising passenger numbers, average fare improvements and an increase in "ancillary costs" - Ryanair has begun charging passengers to check in their luggage - helped to boost revenues.

Takeover battle

Ryanair added that it hoped to win its battle for rival Irish airline Aer Lingus.

"We believe the combination of Aer Lingus and Ryanair into one strong Irish airline group would be rewarding for consumers and will enable us to vigorously compete with the mega carriers in Europe," Ryanair said in a statement.

So far, the firm has acquired a 19.2% stake in the airline.

Over the weekend, the Aer Lingus Employee Share Ownership Trust (ESOT) said it had sent out ballot papers to its 4,665 members asking for their views on the deal.

Mr O'Leary has conceded that a successful takeover of Aer Lingus could depend on the views of the group, which holds a 12.6% stake in the firm. ESOT will reveal the result of the vote on 22 November.

However, the bid is already facing some significant opposition.

Last week, Aer Lingus formally turned down the offer, saying that, despite Ryanair's claims to the contrary, a tie-up between the two airlines would create a monopoly.

On Sunday, the Irish Government stated it would not sell its 25.25% share in Aer Lingus.

In addition, Irish businessman Denis O'Brien and pilots are understood to have begun building up their Aer Lingus stakes in an effort to block Ryanair's 2.80 euros-a-share offer.

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