Shares in Ryanair, the budget airline, opened sharply lower this morning after record first-half profits were joined by downbeat second-half guidance.

The Dublin-based carrier posted record net profits of €237 million (£160 million), in line with forecasts, despite fuel costs more than doubling. However, it said it remained cautious about its outlook for the full year.

Chief executive Michael O’Leary said profits guidance for the full year was unchanged but added: "This winter we expect that there will be continued intense competition and there will be fewer low-fare carriers in the market as higher fuel prices force more carriers out of the industry."

In early deals, the stock was down €0.32 - or 4.5 per cent at €6.665. To track the shares click here.

Fuel costs increased by 108 per cent in the six months to September 30. Ryanair said it expected prices to remain at these high levels "for some time".

Ryanair said its decision not to impose a fuel surcharge, a move taken by many of its rivals, helped it increase the number of passengers carried during the period by 29 per cent to 18 million.

Revenues rose 33 per cent to €946.2 million, reflecting a 29 per cent increase in passengers carried to 18.0 million.

Yields or average fares increased by 3 per cent, while unit costs increased 8 per cent as fuel costs rose 108 per cent to €236.9 million.

Ryanair said it expected the amount it earns per passenger to be broadly unchanged in its third quarter but 5 per cent to 10 per cent lower in the final quarter of the year, in line with previous guidance.

The airline expects to carry around 35 million passengers this year and recently outlined plans to double customer numbers and profits by 2012.

Excluding fuel charges, all other costs fell by 7 per cent during the six months due to the additions of more cost-efficient Boeing 737-800s, new lower cost airport arrangements and cost controls in all other areas.

Davy, the Irish stockbroker, said the figures reaffirmed the strength of Ryanair’s business model - especially since the carrier’s fuel costs were unhedged for almost the entire first half of the year, Davy said.

Ryanair is now 90 per cent hedged – at 49 a barrel – on oil prices which should underpin current year forecasts, UBS, the investment bank, said.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax