Siobhán Creaton,

Finance Correspondent

Ryanair chief executive, Mr Michael O'Leary, has again warned that average fares will fall between 5 and 20 per cent this year. Mr O'Leary also predicted the demise of some competitors amid intense competition.

Announcing 800,000 free seats in London yesterday, Mr O'Leary, suggested there would be no ceasefire in the fares war in Europe this year, which has forced Ryanair to issue a profits warning. He said Ryanair was keeping to its January guidance for a net profit of around €215 million for the year.

"If it [the average fall in fares\] is minus 5 per cent, we will make a small increased profit over the next 12 months. If it is as bad as minus 20 per cent, we will be at breakeven for the next 12 months," he said.

The Ryanair chief executive predicted that Europe's full-service airlines would remain under pressure and that some smaller budget carriers in Britain and Germany could be casualties in the cut-throat competition.

Mr O'Leary said that it would be tough for some of the smaller carriers to survive this winter.

Ryanair pledged last week to keep using Belgium's Charleroi Airport, setting aside a threatened pull-out after the European Commission ordered it to repay the local government €4 million.

Mr O'Leary said on Tuesday that it had now calculated that the repayment would be less than €1 million. - (Additional reporting by Reuters)