FIRST-HALF profit at Ryanair Holdings PLC dived by nearly 77 percent because of high oil prices and lower average fares, Europe's leading budget airline said yesterday.

Ryanair said its net profit for the April-September period fell to 95.3 million euros (US$122.8 million) from 407.6 million euros in the same period of 2007.

The profit slump included two write-offs: for heavy losses sustained in Ryanair's investment in Irish rival Aer Lingus, and for depreciating values of aircraft it plans to sell. Excluding those exceptional items, Ryanair profit was down 47 percent at 214.6 million euros.

Ryanair Chief Executive Michael O'Leary said achieving reduced profits "in very difficult trading conditions, with record oil prices, is a testimony to the strength of the Ryanair lowest-fare model."

Sales rose 16 percent to 1.81 billion euros. But this failed to keep pace with a 19-percent growth in passenger numbers, because the airline cut its fares by an average of 4 percent. The number of empty seats rose to 15 percent, only a one-point gain from April-September 2007.

Expenses jumped 44 percent to 1.57 billion euros, because of exceptionally high fuel costs. Ryanair said its fuel bill accounted for exactly half of its operating costs, up from 36 percent in the same period last year.

O'Leary said he planned to cut average fares this winter by 15 percent to 20 percent to stimulate demand. He said Ryanair could do this because its fuel expenses were rapidly falling in line with the recent drop in the price of oil.

Nonetheless, O'Leary reiterated previous statements that Ryanair expects to record losses in the current October-March period and break even for the full fiscal year.