RYANAIR boss Michael O’Leary hiked his airline’s forecast for annual profits today after a better-than-expected summer for the low-cost carrier.

With passenger numbers up 7% to 48 million in the six months to September 30 and a 6% rise in average fares accompanied by a lower than expected fuel bill, half-year profits rose 10% to £478m.

Revenues rose by 15% to £2.5bn.

Mr O’Leary said there was very little visibility on winter bookings but added that Dublin-based Ryanair would now make full-year profits of between £392m-£416m, up from previous forecasts.

The airline, which is operating 39 winter schedule routes out of Liverpool John Lennon Airport,  will ground up to 80 aircraft this winter as a result of high oil prices, airport fees at Stansted and Dublin airports and seasonally weaker demand.

It expects traffic will be broadly flat over the current half year, leading to growth in full-year passenger numbers of 4% to 79 million.

Summer bookings exceeded expectations, partly due to a post Olympics surge in demand.

The airline added: “We expect market conditions to remain tough as recession, austerity, high fuel costs, and excessive Government taxes dampen air travel demand.

“Further airline failures and consolidations are inevitable.”

The carrier, which operates more than 1,500 flights a day across 28 countries, last week said it would add nine new routes to its airports in Manchester, Liverpool and East Midlands.

Half-year costs were up 8%, mainly as a result of a 24% or £175m increase in its fuel bill.

With gross cash reserves at an all-time record of £3.14bn the company announced a one-off dividend payment for shareholders, approved at the September annual meeting, worth a total of £394 which will be payable on November 30.

Ryanair’s shares were 9% higher today.

* See this Thursday’s Liverpool Post for exclusive Michael O’Leary interview