Ryanair reported a better-than-expected rise of 18 per cent in half-year net profit yesterday as its flamboyant chief executive, Michael O'Leary, indicated he expected to step down in four to five years' time.

Unveiling the first-half results, Mr O'Leary, who has become synonymous with the budget airline, said that he had no plans to move on at the moment.

"I suspect some time in the next four to five years, it will be time for me to go," he told reporters in London.

The low-cost airline said it carried a record 18 million passengers in the six months ended September 30th, a 29 per cent increase on the previous year.

Although first-half profits rose by 18 per cent to €237 million, Ryanair remained cautious about the outlook for the traditionally quieter winter period. It left its guidance for a 10 per cent increase in full-year net profit to €295 million unchanged, although it now expects to carry more passengers than the 35 million it had earlier targeted for the current fiscal year.

The airline repeated that yields - the money it receives per seat - would be flat in the third quarter and 5 to 10 per cent lower in the fourth quarter. Chief financial officer Howard Millar partly blamed this on the fact that Easter fell in March last year.

As a result, the money earned at this peak travel time was included in the company's fourth-quarter results in 2005, but will fall into its first-quarter figures in 2006.

In addition, extra capacity allied to cost-cutting by the flag carriers is expected to put further pressure on yields, which increased by 3 per cent in the first-half, helping to lift revenues by 33 per cent to €946 million.

Adjusted earnings per share were up by 17 per cent to 31 cent.

Meanwhile, Ryanair continues to face high fuel costs. Although the company's unit costs fell by 7 per cent in the first half if the cost of fuel is excluded, they rose by 8 per cent if it is factored in. This was due to a 108 per cent jump in its energy costs to €237 million.

The airline has hedged 90 per cent of its fuel needs, at a price of $49 (€41) per barrel, until March 2006, but after that it is unhedged.

Mr Millar said Ryanair was closely monitoring oil prices with a view to hedging its requirements for next summer.

"If we saw it going to $50 per barrel, that is something we would closely look at," he said.

Meanwhile, ancillary sales continued to perform strongly for the company, increasing by 40 per cent to €129 million in the period.

Sales from services such as car rental, hotel bookings and travel insurance account for 14 per cent of total revenues and are set to continue to outstrip growth rate of passenger numbers.

Although analysts described the results, which were slightly ahead of expectations, as a "solid set of figures", shares in the airline lost 3.4 per cent to €6.76 amid profit-taking and some disappointment that there was nothing to prompt upgrades.

The airline, which recently began operations at Pisa and is due to open its 14th base at Nottingham-East Midlands next March, will shortly announce plans for one new base and the expansion of an existing base.

It said its new routes and bases did well over the summer, with Luton and Liverpool performing strongly although yields at Shannon remain lower than expected.

The airline also hopes to sign a new aircraft maintenance deal before the end of the year. Having agreed a deal with GE to maintain its jet engines, it is in talks with the major maintenance providers about a new airframe deal.

(Additional reporting by Reuters)