Budget airline Ryanair has posted record profits despite soaring fuel costs, and reiterated its desire to buy Irish rival Aer Lingus for £1bn.

Ryanair said profits for the six months to September 30 lifted 39 per cent to 329 million euros (£220 m) as the number of passengers it carried jumped from 18 million to 22.1 million.

Chief executive Michael O'Leary said he now expected Ryanair to make profits of 350 million euros (£234.1m) this year compared with earlier forecasts of 335m euros (£224.1m).

The upbeat message came despite a 42 per cent rise in the cost of fuel in the first half to 337 million euros (£225.4 m).

And Mr O'Leary said his strongly opposed £1bn offer for Aer Lingus would create a "strong Irish airline group" competitive with Europe's largest carriers and offer customers lower fares.

He said: "The Ryanair lowest fare model has repeatedly proven it can generate increased profitability and significant passenger growth during difficult trading conditions while many of our competitors are struggling to deliver profits or are losing money."

He said fuel surcharges imposed on passengers by rivals increased the gap between "their high fares and Ryanairs lowest fares" during the first half.

"Our determination to avoid fuel surcharges has enabled us to deliver rapid traffic growth and generate higher profits," he said.

Ryanair also benefited from a 27 per cent rise in ancillary revenues including food, drink and hotels.

However, Ryanair said it remained "cautious" in its outlook for the second half.