DUBLIN - Irish low-cost airline Ryanair on Monday reported a profit surge in the first half of its financial year due to lower oil prices but warned a decline in fares would mean losses in the second half.

"Ryanair's ability to grow both traffic and profits during the half year is a testament to the strength of Ryanair's lowest fare model, and our relentless cost discipline," Ryanair chief executive Michael O'Leary said in a statement.

"However these results are heavily distorted by a 42 percent fall in fuel costs, which has masked a significant 17 percent decline in average fares.

"We expect average fares to decline by up to 20 percent during Quarters 3 and 4, which will result in both these quarters being loss making," he added.

Net profits went up 80 percent to 387.0 million euros (570.8 million dollars) between April - the start of Ryanair's financial year - and the end of September compared to the same period last year, Ryanair said.

Despite the expected losses in the third and fourth quarters, O'Leary said the forecast for the full year was "substantially profitable, at a time when many of our competitors are losing money, consolidating or going bust".

Ryanair reported an annual net loss of 169 million euros for its last financial year, blaming a 59-percent surge in fuel costs because of record high oil prices as well as a large writedown on its stake in Aer Lingus.

O'Leary also said that Ryanair could cancel or delay planned orders for 200 Boeing aircraft if negotiations with the US jet giant are not completed by the end of the year and that surplus cash could be given to shareholders.