Ryanair's shares slumped by 7 per cent in Dublin yesterday as the airline reported continued softness in bookings and fares.

Chief executive Michael O'Leary said the airline's load factor - the number of seats filled on each aircraft - would decline by two percentage points in the year to the end of March 2008, from the 83 per cent level achieved last year.

"April, May and June so far have had a softer booking profile," Mr O'Leary told analysts in London yesterday. He said there was also "no visibility" on bookings for the winter schedule.

As a result, Ryanair is forecasting that its net profit will grow by just 5 per cent in the year to the end of March 2008, compared with a 33 per cent increase in the year just passed.

Ryanair's stock closed down 38 cent at €5.04 yesterday, as about 15 million shares changed hands in Dublin. This was in spite of the airline posting record after-tax profits of €401.4 million for the year to the end of March and a 22 per cent rise in passenger numbers to 42.5 million.

Ryanair said it planned to double its passenger numbers and profits by 2012.

In response to the slowdown, Ryanair recently gave away one million free seats and is currently offering £20 off all return flights.

Mr O'Leary said the airline would continue to run price promotions in June, July and August in a bid to stimulate bookings.

"There is going to be a fares war throughout this summer and, I suspect, into the winter," he said. "We are going to lead, start and finish the price war."

In the UK, Mr O'Leary said the weakness was probably due to a combination of factors, including an increase in government taxes, a rise in airport charges at Stansted, delays caused by security checks and a rising interest rate environment.

Mr O'Leary said he expected the European Commission to block Ryanair's proposed bid for Aer Lingus on competition grounds. He said the airline would appeal such a decision in the courts and would also fight any ruling from the commission that might force it to sell all or part of its 25.2 per cent shareholding in Aer Lingus.

"We are convinced that they [ the commission] will turn this down, no matter what [ concessions] we offer," he said.

He said a rejection would be "politically motivated".

Ryanair also announced its first share buyback yesterday. The company plans to spend up to €300 million buying back its own stock. Mr O'Leary said this would be the only share buyback for at least three years and the airline would continue with its no-dividend policy.

Ryanair opened 153 routes during the year and added three bases - Marseille, Madrid and Bremen. It expects to launch about 50 routes this year and to increase its traffic by 22 per cent to 52 million.