The strength of oil prices is poised to exacerbate an airline "bloodbath" long predicted for this winter, Ryanair has said, announcing profits ahead of City forecasts.

The airline, noting the closure two weeks ago of V-Bird, the German carrier, said that a "perfect storm" of record crude prices and declining fares would prompt other failures this winter "and beyond".

"Many of our competitor airlines who were losing money heroically when fuel was $25 a barrel are doomed the longer it stays at $50," Michael O'Leary, the Ryanair, chief executive, said.

"Our prediction of a bloodbath may be accelerated."

Ryanair, which this month became exposed to the full impact of the oil market, after the lapse of a hedging policy, estimated that its costs would increase by $55 million over the next six months if the price of Brent crude remained at $50 a barrel.

However, the ticket surcharges some competitors had introduced to recoup fuel costs had provided some benefit to Ryanair in driving passengers to low-cost carriers. The surcharges "increased the price differential, making Ryanair's low fares even more attractive", Mr O'Leary said.

The extra demand had helped limit to 5 per cent a decline in fare yields in the July-to-September quarter. Ryanair had been prepared for a 10 per cent fall.

During the last three months of 2004 and the first quarter of next year, yields would drop by between 5 and 10 per cent compared with the 10 to 20 per cent range the airline had originally forecast.

Profits for the April-to-September period rose by 15 per cent to €200.1 million. Revenues were, at €721.1 million, 21 per cent higher than a year before with passenger numbers up 24 per cent at 14.0 million.

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